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.
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.
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.