midway-sunset oil field

The Midway-Sunset oil field near Taft is one of the state’s most productive.

Local oil and gas producer California Resources Corp. this week sounded its most urgent alarm yet that the company might not survive the COVID-19 pandemic.

CRC told investors it's still trying to restructure its balance sheet following the cancellation in March of a deal that would have allowed it to rework $5 billion in debt. It warned that failure to arrive at a better financial situation could be catastrophic for the company.

"In the event the company is not successful in restructuring its balance sheet, there is substantial doubt about the company's ability to continue as a going concern," the company stated.

Recently California's biggest oil producer, the Santa Clarita-based company employs a combined 1,830 contractors and employees in Kern County.

Monday's statement, filed with the U.S. Securities and Exchange Commission, also says the company has shut in 5,000 barrels per day of production. It said the move will affect its cash flow and reduce the estimated proved reserves of its oilfield properties.

CRC is struggling with some $5 billion in debt left over from its spinoff from Occidental Petroleum Corp., which in April 2014 left California for Texas. The company's CEO recently warned stock analysts about a wall of debt scheduled to mature next year.

Oil prices have plummeted since February because of reduced demand for fuel during the pandemic and a price war between large oil producers Saudi Arabia and Russia.

Monday's statement by CRC included an assessment that the COVID-19 crisis "has and will likely continue" to hurt its business. It withdrew its earnings guidance for the year and said it won't be able to report its first-quarter financials until mid-June.

The company said by email that the regulatory filing discloses a wide range of risk factors it could face but that it continues to work toward an outcome allowing it to continue operations "better positioned to capitalize on its strong asset base and proven operating capabilities when market conditions improve."

"CRC has a consistent track record of adapting its operations to industry conditions," the email states. "The company believes it continues to have constructive relationships with its lenders and other creditors and is working to reach a resolution that will allow the company to continue to operate and provide Californians energy for many years to come.

In March the company said it was studying its options, a phrase observers interpreted as including the possibility of bankruptcy.

The company has also said it's reduced its operating expenses, including cutting paid hours for its local workers, and cut off capital investments.

After Monday's warning, CRC's stock price dropped 26 percent to $1.81. It closed Tuesday at $1.64. A year ago its shares were selling for $22.49 each.

Editor's note: This story has been updated to include the company's emailed statement.

Follow John Cox on Twitter: @TheThirdGraf.

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