About Cadiz

Cadiz Inc., together with its subsidiaries, provides water solutions in the United States. The company is delivering clean, reliable, and affordable water to people through a variety of innovative water supply, storage, conveyance and treatment projects. The company is advancing human access to clean water with its unique combination of land, water, infrastructure and technology assets, cutting-edge innovation, and industry-leading standards of environmental stewardship. The company owns approximately 46,000 acres of land with access to high-quality, naturally-recharging groundwater resources in three areas of Southern California’s Mojave Desert – the Cadiz Valley (35,000 acres), Danby Dry Lake (2,000 acres), and the Piute Valley (9,000 acres) (Cadiz Property). This watershed underlying our property in the Cadiz Valley (Cadiz Ranch) holds 17-34 million acre-feet of groundwater in storage – comparable in size to the largest reservoir in the United States, Lake Mead. Water Supply – The company owns vested water rights to withdraw 2.5 million acre-feet of groundwater to support farming and off property uses. The company has completed extensive environmental review in accordance with local, state and federal laws and authorizing the management of the groundwater aquifer underlying the Cadiz Ranch to conserve an average of 50,000 acre-feet of water per year for 50 years for use in communities. Groundwater Storage - The alluvium aquifer that lies beneath the Cadiz Property is also large enough for conjunctive use as a water banking facility, capable of storing an additional 1 million acre-feet of imported surplus water for delivery during drought periods. Pipeline Conveyance – The company also owns a 30 inches steel natural gas pipeline (Northern Pipeline) that extends 220-miles from the Cadiz Ranch across Kern and San Bernardino Counties terminating in California’s Central Valley. The pipeline, originally constructed to transport fossil fuels, is idle, and the company is preparing to convert the pipeline to transport water. The route of the Northern Pipeline intersects three water conveyance facilities that deliver water to Southern California, the California Aqueduct, the Los Angeles Aqueduct, and the Mojave River Pipeline. The capacity of the Northern Pipeline for water conveyance is 25,000 acre-feet per year (AFY). The company also holds a 99-year lease with the Arizona & California Railroad Company (ARZC) to co-locate and construct a 43-mile approximately 55-85 inches steel water conveyance pipeline (Southern Pipeline) within the existing, active railroad right-of-way that intersects the Colorado River Aqueduct (CRA), one of Southern California’s primary sources of drinking water. The capacity of the Southern Pipeline ranges from 75,000 AFY to 150,000 AFY depending on the pipeline diameter selected to accommodate imported water storage. The company’s unique supply, storage and pipeline assets are located in a remote area of eastern San Bernardino County that sits at the crossroads of major highway, rail, energy, and water infrastructure between California’s primary water supply systems, the Colorado River Basin and the State Water Project. As a result, the company’s Cadiz Water Conservation and Storage Project is uniquely positioned to assist public water agencies in storing and managing unpredictable water supplies and provide reliable, affordable water supplies to chronically underserved areas of California. Treatment - In the fourth quarter of 2022, the company completed the acquisition of the assets of ATEC Systems, Inc. into ATEC Water Systems, LLC (ATEC), which provides innovative water filtration solutions for impaired or contaminated groundwater sources. ATEC has built more than 450 water filtration systems for cities, water districts, investor-owned utilities and small communities and businesses. The company’s activities are focused on providing clean water solutions: water supply, including for agriculture and off-property uses, water storage, conveyance, and treatment. Water Supply & Storage The unique attributes of the aquifer system at the Cadiz Property support the company’s ability to offer water supply for farming and off-property uses and to support the company’s storage and conveyance operations. The aquifer underlying the Cadiz Property contains between 17 – 34 million acre-feet of groundwater in storage. This is more water than is presently held in Lake Mead and Lake Powell, the largest surface reservoirs in the U.S., combined. Cadiz Inc. Natural recharge in the system is estimated at approximately 32,500 acre-feet per year and physical measurements of evaporation from the dry lake playas are consistent with and support the recharge estimate. Actively managing the significant aquifer beneath the Cadiz Ranch can conserve a safe yield of fresh, high-quality groundwater for off-property uses. Cadiz Water Conservation & Storage Project In 2012, the company received approvals from public agencies to implement the Cadiz Water Conservation & Storage Project (Water Project), a public-private partnership with California water agencies that would conserve water at the Cadiz Property as a new water supply for underserved communities in California. The project would also offer up to one million acre-feet of groundwater banking and storage. Water Project operations will follow an extensive, state-of-the-art groundwater management plan and withdrawals of groundwater will be limited to sustainable amounts that preserve the health of the aquifer system and safeguard the desert ecosystem. The Water Project would also utilize the managed groundwater basin to offer storage in the aquifer system for up to one-million acre-feet of fresh water that would be imported and held in storage until needed in future dry years. The total storage capacity of the aquifer system is larger than Southern California’s largest surface reservoir, Diamond Valley Lake, but unlike a surface reservoir would not suffer evaporative losses. A combination of existing and new facilities will be required for implementation and operation of the Water Project. Facilities include a wellfield, integrating with the company’s existing wells, a pipeline manifold system, and power facilities to support operation of the wellfield. The company’s wellfield pumping capacity (upon completion of our 3 wells under development) is 36,000 acre-feet of water per year (AFY), which would support maximum conveyance capacity of the Northern Pipeline (25,000 AFY), as well as existing agriculture. The Water Project may also include a water treatment facility to meet water quality requirements of our partner agencies. The company contemplates the use of two potential pipeline routes for the Water Project; one would extend southwards from the Cadiz Property to the Colorado River Aqueduct in Rice, California (the Southern Pipeline) and the other would extends northwards from the Cadiz Property to Wheeler Ridge, California (the Northern Pipeline). Permits The company has secured permits required to construct and operate the main Water Project facilities at the Cadiz Ranch. From 2010 – 2012, the Water Project completed a California Environmental Quality Act (CEQA) review process including the completion of a comprehensive Final Environmental Impact Report (FEIR). The FEIR concluded that Water Project operations, including the conservation of 2.5 million acre-feet of water from the aquifer system over a 50-year period (50,000 AFY for 50 years) would not cause any significant adverse environmental impacts. The FEIR was certified on July 31, 2012. San Bernardino County, the local agency responsible for groundwater use at the Cadiz Property, has also reviewed the Water Project and in 2012 also approved its Groundwater Monitoring, Management and Mitigation Plan (GMMMP), which establishes a monitoring network across the watershed and regular transparent disclosure of conditions. The FEIR and GMMMP permits allow the conservation and delivery of 50,000 acre-feet of groundwater per year for 50 years to serve beneficial uses in California communities. These permits were upheld and sustained in their entirety by judgements in California’s Superior Court in 2014 and the California Court of Appeal in 2016 and are no longer subject to legal challenge. Northern Pipeline The 220-mile Northern Pipeline is a former segment of a 1,200 mile, 30 steel pipeline constructed in 1985 by All American Pipeline Company to convey oil. In 2001, the pipeline was acquired by El Paso Natural Gas (EPNG) and authorized for natural gas conveyance. In 2011, the company reserved the segment in an option agreement with EPNG and began to explore using the pipeline for water conveyance. In December 2020, BLM granted to our subsidiary Cadiz Real Estate LLC two right-of-way permits to use the pipeline over federal lands. The first right-of-way was an assignment of a portion of an existing right-of-way held by EPNG and renewed by BLM under the Mineral Leasing Act (MLA) that enables the continued maintenance of the route and transportation of natural gas. The second right-of-way was issued under the Federal Land Policy and Management Act (“FLPMA”) and authorizes the conveyance of water in the pipeline over BLM-managed lands. In December 2022, the company re-filed an application with the BLM for an assignment of the existing MLA right-of-way. Cadiz Inc. The Northern Pipeline offers California water purveyors a unique asset and corresponding opportunity to connect available supplies with rural areas of the State that are underserved. The Northern Pipeline crosses a critically dry, rural and underserved part of California and it could directly augment water supply access and storage for 23 state-designated disadvantaged communities along its route. Southern Pipeline In 2008, the company entered into a 99-year lease agreement with the Arizona & California Railroad (ARZC) to utilize a portion of its existing right-of-way southwest from the Cadiz Property to the Colorado River Aqueduct for a conveyance pipeline and related facilities. The company proposed co-location in the right-of-way was also separately assessed by the US Bureau of Land Management (BLM) to determine the need for any federal permitting related to the proposed use of the ARZC railroad right-of-way, which is a federal right-of-way originally granted to the railroad in accordance with the General Railroad Right-of-Way Act of 1875 (1875 Act). MWD Authorization Water supplies conserved by the Water Project would enter the CRA, which is owned by MWD, at the terminus of the Southern Pipeline in Rice, California. The 2012 CEQA process considered a variety of options for the interconnection to the CRA and conveyance of Water Project supplies in the CRA for the benefit of Participating Agencies. Final terms and conditions for entry and conveyance will be determined by MWD in consultation with the joint powers authority. MWD is required to convey water for a third party subject to provisions in California Water Code sections 1810 – 1815, Joint Use of Capacity in Water Conveyance Facilities (also known as the Wheeling Statutes) provided that supplies entering the CRA comply with MWD’s published engineering, design and water quality standards. Water supplies conveyed in the CRA are also subject to all applicable fees and charges routinely established by MWD for the conveyance of water within its service territory. Any wheeling fees will be payable by participants in the Water Project. State Lands Commission Review under Water Code Section 1815 Water Code Section 1815, which is a component of California’s “Wheeling Statutes” referenced above, requires desert groundwater projects to apply for a review by the California State Lands Commission (SLC) prior to moving water in facilities like the CRA. The company has engaged engineering and environmental consultants to complete design plans for all remaining necessary facilities in coordination with public agency partners. This work is ongoing and expected to proceed in coordination with the approval of contracts and conveyance arrangements. Agriculture & Farming All of the company’s land is zoned for agricultural uses. A total of 9,600 acres has been permitted for agricultural use, allowing for planting, irrigation and related infrastructure. Approximately 3,500 acres are used for farming via a combination of lease arrangements and direct farming by the company as follows: 2,100 acres have been leased for lemons and other crops by Fenner Valley Farms LLC. Of this total, 640 acres of lemon orchards that are sub-leased and farmed by Limoneira Company. All farming expenses are borne by the lessee. 760 acres have been developed by the company for alfalfa through planting made during 2022. The acreage is harvested between March and November. All farming at the Cadiz Ranch is conducted in accordance with permits and a management plan overseen by San Bernardino County. All Cadiz Ranch agriculture is developed to be compatible with anticipated Water Project operations. Overlying farming demands will be coordinated with Water Project operations and existing permits to utilize available water for its highest and best use. Water Treatment In the fourth quarter of 2022, the company completed the acquisition of the assets of ATEC Systems, Inc. into ATEC Water Systems, LLC (ATEC), which provides innovative water filtration solutions for impaired or contaminated groundwater sources. Adding the ATEC filtration products to the company’s business portfolio diversifies our range of innovative, sustainable clean water solutions offered in support of its mission to provide safe, affordable drinking water to underserved communities. ATEC has built more than 450 water filtration systems for cities, water districts, investor-owned utilities and small communities and businesses in 10 U.S. states, as well as Canada and Sri Lanka, with system treatment capacities up to 60 million gallons per day (MGD). ATEC systems can be scaled in size to serve small, rural communities as well as larger municipalities, and require less maintenance and upkeep than traditional filtration systems. Stewardship Approximately 30,000 acres of the company’s total 46,000 acres are presently managed for permanent open space. In 2014, the company permanently dedicated approximately 7,500 acres of its Piute Valley properties to conservation. These properties, which are not associated with the Water Project or Cadiz Ranch agricultural operations, are located within terrain designated by the federal government as Critical Desert Tortoise Habitat and/or Desert Wilderness Areas. In February 2015, the California Department of Fish and Wildlife approved the company’s establishment of the Fenner Valley Desert Tortoise Conservation Bank (Fenner Bank), a land conservation bank that makes available these properties for mitigation of impacts to tortoise and other sensitive species that would be caused by any development across the Southern California desert. Under its enabling documents, the Fenner Bank offers credits that can be acquired by entities that must mitigate or offset impacts linked to planned development. In January 2023, the company entered into an agreement with the TMDCI and the Farmworkers Institute of Education & Leadership Development (FIELD), to form a joint venture partnership to develop 11,000-acres of Cadiz-owned properties not in the Cadiz Valley, including the lands approved in the Fenner Bank. The joint venture envisions developing the property for conservation easements and to sustainably manage the groundwater basins and make surplus groundwater available for beneficial uses, including farming, housing, and economic development in less fortunate communities. Subject to conditions precedent, including the construction of the Southern Pipeline, water and proceeds from the project will be shared equally among the parties. The joint venture follows an MOU that the company entered into with FIELD in September 2022 to create a state-of-the-art Innovation Campus at Cadiz Ranch to offer work-based training, education and business opportunities for farmworkers. FIELD launched an English as a Second Language program at Cadiz Ranch for ranch staff in Fall 2022, led by FIELD’s EPIC de Cesar Chavez High School Career Technical Education (CTE) program. Seasonality The company’s water resource development activities are not seasonal in nature. Farming operations on the leased land at the Cadiz Ranch include the year (year ended December 31, 2022)-round cultivation of lemons and alfalfa. These operations have been subject to general seasonal trends that are characteristic of the agricultural industry. History Cadiz Inc. was founded in 1983. The company was incorporated in 1992.