Major oil driller may go bankrupt

California Resources Corp. is seriously considering bankruptcy after the troubled oil and gas company’s efforts to rework its debt out of court fell short amid a crash in energy prices, according to people with knowledge of the matter.

Management is exploring alternatives to address its nearly $5 billion of debt after the Santa Clarita company pulled a proposed bond exchange because of poor market conditions, said the people, who weren’t authorized to comment publicly. CRC’s debt starts maturing next year, and about $74 million of interest is due in June.

“We have significant operating flexibility and are focusing on controlling what we can control, including reducing our capital program and operating costs,” the company said Friday in a statement. “We will continue to consider all options with our advisors as we work through this unprecedented downturn and do not intend to provide updates on ongoing discussions.”

The company’s shares plummeted as much as 62% on Friday, before trading was halted, for the biggest intraday tumble since they began trading in late 2014.

California’s biggest oil producer has struggled to manage its debt since it was spun off from Occidental Petroleum Corp. in late 2014, during the early stages of a crash in crude prices. Low cash, tighter state regulations and plummeting oil demand amid the coronavirus and Saudi Arabia-Russia price war have added to the pressure.