CRC To Halt Most Drilling If Ruling Stands

A court ruling threatens to sharply limit the ability of Long Beach-based oil and natural gas production company California Resources Corp. to drill for new oil and natural gas in oil-rich Kern County for months or even years to come.

In the latest twist in a long-running legal battle, a state appellate court ruling issued earlier this month sets aside a 2015 ordinance by Kern County that aimed to fast-track the complex permitting process for drilling of new oil and natural gas wells in the county and would have allowed drilling near residences and schools.

A local farmer and several environmental groups had challenged the ordinance, saying it does not comply with existing state environmental laws. The judicial panel ruled that the county must ensure compliance before attempting to reenact the ordinance. 

The ruling temporarily halts the issuance of new drilling permits. Kern County now has the option of attempting to rewrite the ordinance in a way that satisfies the judicial ruling.

California Resources is one of three oil companies that combined comprise the lion’s share of oil and natural gas production in Kern County. The other two are San Ramon-based Chevron Corp. and Bakersfield-based Aera Energy.

California Resources last month agreed to acquire Aera Energy. The deal must still obtain various state and federal approvals before it can be finalized.

Shares of California Resources plunged 8% the day the appellate court decision was made public, but regained all of that ground and a bit more during the next five trading sessions. Shares closed March 14 at $54.02, up nearly 2% from the pre-decision close on March 6. 

Late on March 7, California Resources disclosed in a filing with the Securities and Exchange Commission that it is evaluating its next steps in light of the ruling. 

The company had previously disclosed in its most recent quarterly report that if it is not able to obtain new well permits for the remainder of this year it plans to run just…