What happened

Shares of oil and natural gas exploration-and-production company California Resources Corporation (NYSE:CRC) closed down 29.5% Thursday.

Surprisingly, up until about 2 p.m. EST, the stock was doing just fine. But it suddenly fell off a cliff after reports began showing up on Bloomberg and debt-market reporter Debtwire to the effect that the company has recently "met with restructuring advisors, gauged sale prospects," according to StreetInsider.com.

Cartoon characters are surprised by a falling stock chart.

Image source: Getty Images.

So what

With no further details immediately available, it's hard to gauge precisely how serious this situation is -- or even whether the reports are accurate at all. That being said, California Resources Corporation is a company with more than $5 billion in debt and only $27 million in the bank, according to data from S&P Global Market Intelligence.

Now what

Even in the capital intensive oil business, that's rather a lot of debt. Worse, also according to S&P Global data, California Resources hasn't generated a penny of positive free cash flow since 2016.

If California Resources can't figure out a way to generate some cash from its business, maybe a "restructuring" isn't such a bad idea after all.