California’s Largest Oil Driller Files for Chapter 11 Bankruptcy

California Resources, the largest oil driller in the state, has filed for bankruptcy protection, the company said a press release.

The company said it had filed for chapter 11 bankruptcy, aiming to reduce its debt burden by about $5 billion. The company became the latest casualty of oil price crash caused by the coronavirus pandemic, which wiped out the demand for oil.

California Resources said the planned restructuring would “enable the company to operate safely through the current downturn in oil prices and establish a solid financial foundation to enhance future value creation.”

More than 18 oil and gas companies in the nation filed for bankruptcy during the second quarter of 2020. According to data from Haynes and Boone, as many as 41 companies in the energy industry have filed for bankruptcy protection this year.

The drop in the demand for oil and unsustainable debt levels has caused a number of companies in the industries to default on their bonds. The banking industry has also cut credit lines to the troubled industry.