rtmark
LearnBonds.com

Explorer California Resources files for bankruptcy amid energy slump

Mohit Oberoi
Author: Mohit Oberoi

Last Updated: July 16, 2020
California Resources

Oil driller California Resources has filed for Chapter 11 bankruptcy, joining more than 20 US energy companies that have filed for bankruptcy this year. Most US energy companies are struggling to manage their finances amid the slump in energy markets as a result of the coronavirus pandemic.

Over 200 US oil explorers have filed for bankruptcy protection since 2015 and many more are expected to file for bankruptcies in the coming weeks. Last month, Chesapeake Energy, the second largest US natural gas producer, also filed for bankruptcy, one of the most high-profile energy company bankruptcy of 2020.

Noble Corp and Denbury Resources have also missed their July debt repayment while Chapparal Energy has asked lenders for more time.  Energy prices have slumped this year and in April, the West Texas Intermediate (WTI) turned negative for the first time in history. While WTI has since risen swiftly to over $40 per barrel, it is still down 34% for the year. Crude oil prices are trading down almost 1% today after the OPEC+ block decided against extending the oil production cut.

US shale producers, who generally have higher production costs as compared to producers in the Middle East and Russia, are finding it hard to repay debt with WTI languishing near $40 per barrel.

California Resources was created as a spinoff from Occidental Petroleum in 2014. It inherited a net debt of over $6bn after the spinoff.

“We have consistently operated within cash flow, significantly reducing the outsized debt burden we inherited from Occidental Petroleum at our December 2014 spin-off. However, today’s unprecedented market conditions, including oversupply and reduced demand due to COVID-19, require that we further reduce our debt through a Chapter 11 process,” said California Resources chief executive Todd Stevens.

While California Resources received $320m financing from Tom Barrack Jr’s Colony Capital last year, the fund infusion could not offset strict drilling regulations and its weak balance sheet. The weak energy price environment further compounded the company’s woes.

California Resources owes $6.1bn spread to 50,000 creditors. It has received $1.1bn in debtor-in-possession financing and plans to eliminate $5bn in debt through restructuring. California Resources share was up 5.6% yesterday but has lost 87% of its value year to date.

If you are interested in trading in crude oil, we have compiled a list of some of the best brokers for crude oil trading. For more information on commodity trading please see our selection of some of the best online commodity brokers

Trusted & Regulated Stock & CFD Brokers

Rating

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

Rating

What we like

  • Sign up today and get $5 free
  • Fractals Available
  • Paypal Available

Min Deposit

$0

Charge per Trade

$1 to $9 PCM

Rating

Visit Now

Investing in financial markets carries risk, you have the potential to lose your total investment.

Available Assets

  • Total Number of Shares999
  • US Stocks
  • German Stocks
  • UK Stocks
  • European Stocks
  • EFTs
  • IPOs
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 $1 - $9 per month
  • NASDAQ $1 - $9 per month
  • DAX $1 - $9 per month
  • Facebook $1 - $9 per month
  • Alphabet $1 - $9 per month
  • Telsa $1 - $9 per month
  • Apple $1 - $9 per month
  • Microsoft $1 - $9 per month

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Mohit Oberoi

Mohit Oberoi is a freelance finance writer based in India. he has completed his MBA with finance as majors and also holds a CFA charter. He has over 13 years of experience in financial markets. He has been writing extensively on global markets for the last six years and has written over 6,500 articles. He mainly covers metals, electric vehicles, asset managers, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.