California Resources Corporation (CRC) could not stave off bankruptcy in 2020, hit simultaneously by a price war in oil & gas and the worldwide coronavirus pandemic.
“CRC will emerge from Chapter 11 as a strong, healthy company committed to providing Californians with safe, affordable, reliable and locally produced energy, good-paying jobs and millions of dollars in annual government revenues for vital public services for many years to come," said Todd Stevens, president and CEO. "We take this role very seriously, and our commitment to ensuring a safe, diverse, and resilient supply of energy from California resources will not change.”
CRC is the state’s largest oil and gas production company with more than two million acres of reserves spanning four major basins. The company is seeking relief from $5 billion in debt and looming interest payments. The Santa Clarita-based company, created in late 2014 as a spin-off from Occidental Petroleum, was saddled with debt from its inception after transferring billions of dollars to Occidental.
A global oil price war earlier this year and pandemic-related stay-at-home orders have caused steep drops in demand and caused huge losses to CRC's market value. As of mid-July, its share prices had plunged 92% in the past 12 months.
The company’s FRISK® score had been a flat “1” for the last few years:
Our FRISK® score model incorporates four powerful risk inputs:
- “Merton”-type model of stock market capitalization and volatility
- Financial ratios, including those used in the Altman Z”-Score Model
- Bond agency ratings from Fitch, Moody's, and DBRS Morningstar
- Website click pattern data from CreditRiskMonitor® subscribers, representing key credit decision-makers at nearly 40% of current Fortune 1000 companies plus thousands of other large companies worldwide
Since the start of 2017, the FRISK® score’s rate of success in capturing public company bankruptcy is 96%. In any given year, you can count on one hand the times we miss – and in those outlier cases, the circumstances deal with unusual, unforeseen events such as natural disasters and CEO fraud.
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CreditRiskMonitor® Bankruptcy Case Studies provide post-filing analyses of public company bankruptcies. Our case studies educate subscribers about methods they can apply to assess bankruptcy risk using our proprietary FRISK® score, robust financial database, and timely news alerts.
In nearly every case, a low FRISK® score gave our subscribers early warning of financial distress within a one-year time horizon. Our proprietary FRISK® score predicts bankruptcy risk at public companies with 96% accuracy. The score is formulated by a number of indicators including stock market capitalization and volatility, financial ratios, bond agency ratings from Moody’s, Fitch and DBRS, and crowdsourced behavioral data from a subscriber group that includes nearly 40% of the Fortune 1000 and thousands more worldwide.
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