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CRC buys more time to pay its debts

south belridge1 (copy)

This is a view of oil production in Kern County's South Belridge Oil Field, one of the most productive in California.

Oil producer California Resources Corp., the large local employer that has struggled lately to keep up with its debt payments, said Thursday it has won more time to satisfy its biggest creditors.

After missing a payment deadline of 8:59 p.m. Tuesday and then declining to address the matter publicly, CRC said in a filing with the U.S. Securities & Exchange Commission that it now has until 8:59 p.m. Tuesday to pay about $30 million in interest payments.

The Santa Clarita-based company said after the close of trading that some of its lenders had agreed Tuesday to extend the terms of their existing forbearance agreements with CRC, while others didn't agree to an extension until Thursday.

The deadline extensions offer relief in that they save the company from having to declare bankruptcy immediately. But they do little if anything to substantially repair the company's financial crisis.

CRC recently has been unable to pay the interest on nearly $5 billion in debt left over from its 2014 spinoff from Occidental Petroleum Corp. when Oxy left California for Texas.

CRC said it had been on the cusp of a deal to restructure its debt in March when barrel prices collapsed because of sharply lower global demand for energy during the COVID-19 pandemic and a price war between Russia and Saudi Arabia.

Since then CRC has missed at least two deadlines to make tens of millions of dollars in interest payments.

News reports said the company used some of the time to negotiate a financial package that would carry it through a planned bankruptcy filing. CRC has declined comment on that assertion.

CRC is among California's largest producers of oil and gas. It said in April it had about 730 employees and 1,700 contractors in Kern County.

On Thursday, the company posted a $1.74 billion hit to its first-quarter earnings, saying its assets were now worth far less than what the company paid for them.

CRC warned in May it might not survive if it was unable to address its dire financial condition.

The company has bigger problems beyond low oil prices and the near-term debt payments.

President and CEO Todd Stevens told stock analysts in February that he hoped to address a "maturity wall" of debt scheduled to become due at the end of 2021.

Follow John Cox on Twitter: @TheThirdGraf

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