If you're a shareholder in California Resources (CRC), you just saw a quarter of its market cap disappear.
Wall Street has long been eyeing the penny stock, which has been sitting in a quagmire of high-yield leverage problems, with many wondering how much oil can further drop before its equity is totally wiped clean -- but few expected shares to tank 26.5% Thursday.
Shareholders are dumping CRC's stock and bonds as many begin to lose hope in the Los Angeles-based oil and gas company's ability to survive months of depressed prices. California Resources' high-yield bonds topped the chart of most active trades in the asset class Thursday, according to Bloomberg data, with its tranche of 8% senior unsecured notes due in 2022 down nearly 3% in secondary markets to just $0.19 on the dollar.
The company is also lugging $7.4 billion in debt, and has long been burning what's left of its cash and seems hopeless at turning a profit, posting a net loss of nearly $250 million in the last three reported quarters, based on its latest quarterly SEC filing.
The balance-sheet mess helps explain its 90% decline over the past 12 months, and 74% so far this year, begging the question: How much more can oil decline before what's left of CRC's share price is dissolved in a restructuring black hole?