California Resources Corporation Wildly Misses Earnings Estimates, Shares Drop 11%

By Markets Fool.com

Image source: Getty Images.

Continue Reading Below

What: Shares of California Resources Corporation (NYSE: CRC) are down 10.9% as of 11 a.m. EDT Thursday after the company reported earnings that came in well below expectations for the quarter.

So what: California Resources reported a net income loss of $3.51 per share, which was quite a bit below Wall Street analyst estimates for a $1.57 per-share loss. Even if we were to strip out several one-time charges, a $1.80 per-share loss would still be below expectations. It also didn't help that the company saw declining production levels in the quarter, and operations weren't able to generate any cash for the quarter.

Now what: California Resources has no plans for drilling for the rest of the year and expects to spend only $10 million to $20 million per quarter for the rest of the year on maintenance capital. So we can probably expect production to slip even further for the coming months. It's also discouraging that we're starting to see oil prices slip back to around $40 a barrel. It that price range, California's results could look even worse in the coming quarter. There is also that massive debt load that will need to be addressed much faster than the company has done so far.

Anyone interested in this stock needs to realize that it's highly speculative and fraught with risk at these low oil prices. Even if we were to see a material improvement in oil prices in the coming quarters, there are still plenty of other reasons to steer well clear of this company.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Continue Reading Below

Tyler Crowe has no position in any stocks mentioned.You can follow him at Fool.comor on Twitter@TylerCroweFool.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.