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California Resources May Be Headed for Bankruptcy

California Resources will file for bankruptcy this weekend unless it gets another debt extension, a report says.

California Resources  (CRC) - Get California Resources Corp Report shares rose Monday after the oil driller said the majority of its senior lenders have agreed to wait until Sunday before potentially declaring a default, The Wall Street Journal reported.

Journal sources said bankruptcy may be forthcoming.

The company, spun off from Occidental Petroleum  (OXY) - Get Occidental Petroleum Corporation Report in 2014, failed to make a $30 million payment to lenders last month.

California Resources will file for bankruptcy by this weekend, unless it obtains another extension from the lenders and other creditors, knowledgeable sources told The Journal.

The company mostly does conventional oil and gas drilling, but it also does extraction in the Monterey shale.

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All oil companies have been hammered by the plunge in oil prices from January to April. The plunge stemmed from sagging demand amid the coronavirus pandemic and a production war between Russia and Saudi Arabia.

Crude has rebounded sharply since then but remains down about one-third from the beginning of the year. In trading Monday, West Texas Intermediate crude fell 3.36% to $38.22 a barrel.

Many analysts view Chevron  (CVX) - Get Chevron Corporation Report as the strongest of the major oil producers.

“Historically, Chevron has benefited from an oil-leveraged portfolio that has led to peer-leading margins and returns on capital,” Morningstar analyst Allen Good wrote in a commentary last month.

“We expect it to maintain its edge as it moves into the next phase of growth, which is focused on leveraging its large Permian Basin position.”

California Resources recently traded at $3.05, up 51.74%. Even after Monday’s surge, the stock has plunged 64% in the last three months,