July 18, 2020 Read More →

Largest oil and gas exploration firm in California files Chapter 11, taxpayers potentially on hook for cleanup

Elk Grove News:

The California Resources Corporation (CRC), the largest oil and natural gas exploration and production company in the state, has filed for Chapter 11 bankruptcy, potentially leaving California taxpayers on the hook for a massive cleanup. 

CRC and its affiliates operate approximately 18,700 wells in California, including 7,826 that are already “idle,” meaning they’ve produced little to no oil in the past two years. It could cost more than $1 billion to properly plug the company’s abandoned oil wells, according to the Institute for Energy Economics and Financial Analysis. 

Specifically, the company announced it has entered into a Restructuring Support Agreement (“RSA”) with holders of approximately 84% of the Company’s 2017 term loans, 51% of the Company’s 2016 term loans and its Elk Hills midstream joint venture partner, Ares Management L.P. 

In 2014, CRC was created as a spin-off by Occidental Petroleum and took over Occidental’s California oil and gas wells. Since then, CRC has performed poorly, earning “junk bond” status from ratings agencies. CRC blamed the coronavirus pandemic and economic downturn for the bankruptcy, but CRC was at high risk of bankruptcy even before these events, as detailed in a report from the Institute for Energy Economics and Financial Analysis. 

[Dan Bacher]

More: As California Oil Giant Files for Bankruptcy, Environmental Justice Groups Urge Governor to Plan for Just Transition

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