Investors slammed local energy stocks after news hit Tuesday that California's governor intends to expand his crackdown on in-state oil production.
Shares of two oil companies that have focused investment in the state, California Resources Corp. and Berry Petroleum Co. LLC, lost more than a fifth of their value Tuesday following the announcement of a three-pronged approach that could lead to potentially strict new regulations for California oil producers.
Berry's stock closed even lower Wednesday and CRC's stock rebounded somewhat. Both companies released statements to investors, Berry on Tuesday and CRC Wednesday, downplaying expected impacts from the state's new regulatory plans.
Tuesday's declines came on a mixed day for oil-related shares: Shares of Chevron, ExxonMobil and Occidental Petroleum Corp. declined less than 4 percent and ConocoPhillips rose modestly. Meanwhile, the broad-based S&P 500 index was relatively unchanged.
Santa Clarita-based CRC, whose operations are entirely within the state, on Tuesday suffered a 27 percent drop in its stock, which closed that day at $6.20. It recovered some lost ground Wednesday, closing at $6.63.
CRC on Wednesday issued a written statement downplaying potential impacts from Tuesday's announcement by the state Division of Oil, Gas and Geothermal Resources.
The company said it did not expect the state's regulatory intentions regarding the oilfield techniques of cyclic steaming and hydraulic fracturing to "have a significant effect on its production, plans or reserves."
Saying it is not dependent on any single oilfield, well-drive mechanism or well-completion method, CRC noted it does not use the kind of high-pressure cyclic-steaming technique that DOGGR announced it would review during a moratorium on new permits.
CRC also said that during the past several years, less than 10 percent of its wells have used "well stimulation," a reference to a technique more commonly referred to as hydraulic fracturing, which was also targeted for further review in DOGGR's announcement.
Dallas-based Berry, which has operations in other states but focuses more on its California holdings, saw its stock price plunge 21 percent to close Tuesday at $8.90. It fell again Wednesday to close at $7.13.
The company said in a news release Tuesday that its 2019 financial performance won't be hurt by California's moratorium on new permits for cyclic steaming at pressures high enough to crack the surrounding rock.
It added the state's action "only potentially impacts" certain future wells and that the company has "an extensive bullpen of drilling opportunities" and "a diverse asset portfolio for generating strong shareholder returns."
Chevron Corp. declined to comment, as did privately held Aera Energy LLC, based in Bakersfield. Both referred questions to the trade group Western States Petroleum Association.
WSPA on Tuesday said clamping down on California oil production only makes the state more reliant on petroleum produced overseas countries "that do not share our environmental safety standards."