Los Angeles Passes Law to Ban Oil and Gas Wells – direct hit to CRC

The Los Angeles city council has voted to eliminate new oil and gas wells in the city, and phase out existing production over five years.

This follows a motion from LA County to eliminate new well drilling, that was passed late last year, bringing an end to a number of fields producing since the 1920s.

The County produces ~50kb/d, with California Resource Corporate (NYSE:CRC) producing ~20kb/d in the basin; CRC’s total production volume was 102kboe/d last quarter.

CRC is a pure-play California producer, that was spun out of Occidental (NYSE:OXY) amidst the 2014 oil-price downturn, the Company has since filed bankruptcy but emerged during the pandemic and was up 80%+ in the last year.

California fossil fuel policies have been a major headwind for the operator, but this appears to be the most impactful decision yet by regulators in the State.