THE LARGEST OIL PRODUCER OF CALIFORNIA MIGHT GO BANKRUPT

The experts have been talking about the high probability of bankruptcies of the gas and oil companies in the United States for a long time. But now the words turned into deeds - California Resources informed its investors and creditors about the possibility of bankruptcy last Monday.

The company is the largest oil producer in California. According to rough estimates of the experts, the proven oil reserves at the end of 2019 amounted to 644 million barrels.

However, the company is unable to reconstruct its balance, which is the reason why the activities of the company might be completely suspended.

The American analysts say that California Resources has had financial problems almost since its foundation. The company has been independently operating in the market for the past six years, having separated from Occidental Petroleum at the end of 2014. However, the current situation, in which the company's management is forced to postpone the publication of reports for the first quarter until the summer, goes beyond.

Having reduced its own capitalization by almost three quarters from the beginning of 2020, an enterprise with a high probability can begin bankruptcy proceedings soon.

The representatives of the company noted that in the situation of pandemic, the management and all the office staff were forced to work remotely over the past two months. To reduce costs and liquidity after the commodity prices collapse, the employees were transferred to a reduced working mode. Under these circumstances, the company tried to explain why the preparation, verification and completion of the financial reporting were delayed.

On Tuesday, California Resources shares dropped in price for 79 cents, which is around 32.5%.

On that day, the Dow Jones index fell by 1.9 % and the index of Nasdaq by 2.1% on the New York Stock Exchange. An indirect reason for such a fall could be a statement by the leadership of California Resources that they doubt the possibility of further activities of the company if the value of the shares continues to decline.

Previously, Rusbankrot have already posted a material about the bankruptcy of the American oil company Chesapeake Energy, caused by falling prices and the consequences of the pandemic.