California Resources Corp. disclosed in a Securities and Exchange Commission filing on Tuesday that there are doubts the company will stay in business, sending its stock down 32 percent.
“As previously disclosed, the company is continuing to pursue the restructuring of its balance sheet,” the 8-K filing said. “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 Santa Clarita oil and gas producer also said that it would be filing its next quarterly report late due to circumstances stemming from the COVID-19 pandemic.
The company relies on oil prices, which have been chopped in half since the pandemic started and at one point went negative. Chesapeake Energy Corp. in Oklahoma City, another independent producer, on Monday also issued a going-concern warning.
California Resources said that management and all its office personnel have been working remotely for the past eight weeks, in addition to reducing work hours in order to cut costs “to preserve liquidity after the further deterioration of commodity prices following the outbreak of the coronavirus pandemic.
“These actions have resulted in delays in the preparation, review and completion of its financial statements for the quarter ended March 31, 2020 and affected the timely completion of its required internal controls over financial reporting,” the company said in the filing.
California Resources expects to file its quarterly report in mid-June.
It also announced it was shutting in the equivalent of 5,000 barrels a day of oil production, which is equivalent to a manufacturer halting an assembly line.
The company is the state’s largest independent oil and gas producer. It was formed in 2014 as a spinoff from Occidental Petroleum Corp.
Shares of California Resources (CRC) closed Tuesday down 79 cents, or 32.5 percent, to $1.64 on the New York Stock Exchange, on a day when the Dow fell by 1.9 percent and the Nasdaq dropped by 2.1 percent.