California Resources files for bankruptcy protection

(Reuters) – California Resources Corp filed for Chapter 11 on Wednesday after defaulting on interest payments, becoming the latest U.S. energy major to seek bankruptcy protection in recent years following the slump in oil prices.

The oil and gas producer reached an agreement for $1.1 billion debtor-in-possession financing package, which also refinances the company’s current revolving loan facility.

The oil driller filed for the pre-arranged restructuring in the bankruptcy court in the Southern District of Texas, and listed both assets and liabilities in the range of $1 billion to $10 billion.

California’s biggest oil and natural gas producer has been weighed down by massive borrowings since its spinoff from Occidental Petroleum in 2014.

Weak demand due to the coronavirus pandemic and a price war between major oil producers resulted in a historic plunge in oil prices.

Like many of its peers, California Resources also cut its production and capital spending, and told investors in May it might not be able to continue operations without restructuring its debt.

Its bankruptcy filing follows debt-laden major shale independents such as Chesapeake Energy and Whiting Petroleum who succumbed to one of worst crisis that the oil industry has faced.

(Reporting by Arundhati Sarkar and Arunima Kumar in Bengaluru; Editing by Sherry Jacob-Phillips)