$8.49 -$0.41 (-4.6%)

04:15 PM EST on 01/17/20

California Resources Corp Com (NYSE:CRC)

CAPS Rating: 1 out of 5

Current Price $8.49 Mkt Cap $417.0M
Open $8.95 P/E Ratio 1.10
Prev. Close $8.49 Div. (Yield) $0.00 (0.0%)
Daily Range $8.34 - $8.96 Volume 542,405
52-Wk Range $7.66 - $11.06 Avg. Daily Vol. 2,751,971

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All Players

24 Outperform
15 Underperform
 

All-Star Players

5 Outperform
12 Underperform
 

Wall Street

0 Outperform
1 Underperform
 

Top NYSE:CRC Bull/Bear Pitches

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jed71 (99.85)
Submitted August 09, 2016

I suspect, as with most of my oil and gas picks, I have very few followers on this red thumb. The funny part is this is about as easy as it gets as far as analysis of the financial situation of a mid-tier driller. That doesn’t mean this is a complete… More

NYSE:CRC VS S&P 500 (SPY)

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Recs

2
Member Avatar jed71 (99.85) Submitted: 8/9/2016 2:08:44 PM : Underperform Start Price: $12.10 NYSE:CRC Score: +81.94

I suspect, as with most of my oil and gas picks, I have very few followers on this red thumb. The funny part is this is about as easy as it gets as far as analysis of the financial situation of a mid-tier driller. That doesn’t mean this is a complete no-brainer, but I think there is enough here to put a stake in the heart of what remains of this firm.

The debt they carry is what I think will eventually sink this ship. Nearly $6 BILLION in total debt for this small firm. And they just took out another $1BB term loan with a lender:

“California Resources Corp announces new $1 bln term loan

The new Syndicated Facility would have an expected 5-year term and bear interest at a rate of LIBOR plus 10.375% per annum, subject to a 1.00% LIBOR floor.”

Look at that interest rate – 11.375% at the low end!!! Granted, they are using part of the proceeds to pay down their 2020 through 2024 debt. This really does prove that there is so much capital in search of yield. I cannot see any lender thinking this is a good risk, unless they got bumped to first lien status on their assets. Even in that case, this is a huge risk for a lender. In a normal interest rate environment, this company would already be bankrupt, in my opinion. Compare all of that debt with the measly ~$500MM per quarter in average revenue. The debt generates about $80MM in interest expense every quarter. It will be higher oince the new debt starts paying interest. As you can probably imagine, GAAP earnings are also incredibly awful.

There are a several things that worry me here. First, if interest rates begin rising, even by a few points, this company is toast. They have proven they already have to pay though the nose to get financing now, and I doubt that changes anytime soon. Second, because production is low, they are struggling to get profitable again and likewise struggling to maintain positive cash flow. And third, sustained compression of oil prices will crush them over time. The best this company can hope for, is that they get $80 oil again. I think it’s a huge stretch to think this will happen within the next 12-18 months. There are way too many risks here for my taste. While there are gamblers that will disagree with my analysis, and will continue to trade this, I think over time my thesis will be proven correct.

Leaderboard

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Score Leader

TrackJimCramer

TrackJimCramer (87.34) Score: +143.28

The Score Leader is the player with the highest score across all their picks in CRC.

Top
Pick
Member Name Member
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
Index
Gain
Score Commentary
IdahoInvestor 32.10 8/17/2015 Underperform 5Y $39.59 -78.55% +59.10% +137.65 0 Comment
RyanIdaho 97.71 6/21/2018 Underperform 5Y $39.26 -78.37% +20.89% +99.26 0 Comment
biotechf 97.23 2/3/2016 Underperform 5Y $10.25 -17.17% +75.85% +93.02 0 Comment
Tak3natheFlood 99.22 9/29/2016 Underperform 5Y $12.69 -33.10% +54.57% +87.67 0 Comment
patatepoil6 99.89 10/19/2016 Underperform 5Y $11.70 -27.44% +55.15% +82.58 0 Comment
jed71 99.85 8/9/2016 Underperform 5Y $12.10 -29.83% +52.11% +81.94 1 Comment
DrDoofenshmirtz 99.85 2/7/2019 Underperform 5Y $19.05 -55.42% +23.49% +78.91 0 Comment
RyanCoke 99.92 11/7/2017 Underperform NS $16.08 -47.19% +28.13% +75.32 0 Comment
JesseL < 20 4/19/2017 Underperform 5Y $12.75 -33.41% +41.59% +75.00 0 Comment
Under5 < 20 10/31/2019 Outperform 5Y $4.80 +76.88% +9.97% +66.91 0 Comment

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