California Resources Corp. (CRC) has shut-in 5,000 boe/d of output and warned in a federal filing that there is “substantial doubt” it may continue in the face of the decline in global energy demand and prices.

The independent provided the information in a Form 8-K filing with the U.S. Securities and Exchange Commission (SEC). It also has delayed filing the first quarter Form 10-Q report until mid-June. Chesapeake Energy Corp. also warned of potential bankruptcy on Monday.

Citing a Covid-19 exemption the SEC had granted in March, CRC said it was unable to meet the normal deadlines. Most staff have been working from home and as of early April had reduced hours “to preserve liquidity.”

“The Covid-19 pandemic has and will likely continue to affect CRC’s business in adverse ways,” the filing stated. California’s largest producer said it has been staggered by the combination of “unprecedented reductions” in oil demand and continuing declines in global oil prices.

“The severity, magnitude, and duration of current or future Covid-19 outbreaks, and the impact on the economy generally and oil prices in particular, is uncertain, rapidly changing and hard to predict,” the filing noted. Current global indicators are that the low prices may be around for a relatively long time, it noted.

CRC has reduced operating expenses and planned capital expenditures to operations “necessary to maintain mechanical integrity of its facilities to operate them in a safe and environmentally responsible manner.”

The reduced spending will “negatively impact” future quarter production levels, which when combined with the prospect for low commodity prices could “materially affect” cash flows and “may materially and adversely affect the quantity of estimated proved reserves.”

Commodity prices may “remain volatile and depressed for the foreseeable future.” CRC put no timeline on its efforts to restructure, but it said if it “ is not successful in restructuring the balance sheet, there is substantial doubt about the company’s ability to continue as a going concern.”

CRC was formed in 2014 as a spinoff from Occidental Petroleum Corp.

Spokesperson Margita Thompson told NGI’s Shale Daily that CRC has a “consistent track record” of adapting operations to changing industry conditions. “The company believes it continues to have constructive relationships with its lenders and other creditors and is working to reach a resolution that will allow the company to continue to operate for many years to come.

“CRC continues to work toward a balance sheet outcome that will enable it to continue operations better positioned to capitalize on its strong asset base and proven operating capabilities when market conditions improve.”