Shares of California Resources (NYSE:CRC) jumped on Tuesday and were up 10.4% at 11:00 a.m. EST. That's its second double-digit jump this week, this time fueled by the oil producer's third-quarter results.
California Resources reported an adjusted net loss of $52 million, or $1.22 per share, which beat the consensus estimate by $0.41 per share. Furthermore, its net loss narrowed from $71 million, or $1.74 per share, in last year's third quarter. Higher oil prices were the driving force, with the company realizing $50.02 per barrel during the quarter, up $6.99 per barrel from last year's third quarter. That helped it overcome a 7% decline in production and a more than $2-per-barrel of oil equivalent increase in production costs.
California Resources also reported that its banks approved the amendment of its credit facility, which would extend the maturity date to 2021 and relax some of the financial covenants to provide the company with a bit more breathing room. Creditors also agreed to keep its borrowing base at $2.3 billion, which gives it ample liquidity for the time being.
While its third-quarter results weren't as bad as analysts feared, the company still has a long way to go before it's back on solid ground. It's not generating enough cash to maintain its current production rate, evidence being a 7% drop in output over the past year, including 1% from the second quarter. That's because California Resources is using some of its cash flow to reduce debt, though it still has a long way to go before leverage would be at a more comfortable level. So, investors shouldn't chase this oil stock, especially since its still-tight financial situation puts it well behind stronger rivals.