Shares of California Resources (NYSE:CRC) jumped more than 10% by 2:30 p.m. EST on Wednesday. That rebound in the California-based energy company comes on the heels of a more than 20% plunge yesterday after that state's governor stopped the approval of certain drilling permits.
California-based oil producers plummeted on Tuesday after Governor Gavin Newsom stopped approving permits to hydraulically fracture new oil wells until an independent panel of scientists could review those projects. He also imposed a moratorium for steam-injected oil drilling in response to a recent spill at a Chevron facility in the state.
California Resources, however, put out a statement today saying that it doesn't expect the proposal to have a "significant effect on its production, plans, or reserves." The company also pointed out that:
CRC is not dependent on any single field, drive mechanism, or completion method. The steamfloods CRC operates do not require high-pressure cyclic steam injection as referenced in the proposal. In addition, over the past several years, less than 10% of CRC's wells were completed using well stimulation. Currently, CRC is operating a total of eight rigs drilling wells, none of which require well stimulation.
That statement seemed to ease investors' concerns that the Governor's actions would have a direct impact on its operations and earnings. However, there's still some lingering worry that the company might feel the effect of future legislative actions against oil companies operating in the state. That's something it can't afford, given its outsized debt load that it's struggling to manage amid the persistent weakness in oil and gas prices.