California Resources Corp (NYSE:CRC) Delivers For Our Subscribers

Last month, we at Insider Financial told our subscribers that California Resources Corp (NYSE:CRC) was a high reward opportunity. Boy, were we right on the money. Shares have gone from $.38 when we first recommended them to hitting $2, a gain of over 400% in less than a month. These are the types of moves we go looking for our subscribers. We said:

"Currently trading at 52 week lows, we see CRC as one of the best risk/reward opportunities in the oil patch. CRC certainly has the potential to be a multi-bagger and one which we are definitely watching and keeping an eye on."

A number of factors helped drive shares of CRC higher. First, oil prices look to have bottomed and have made a strong bounce off the lows. While it's hard to say if this trajectory will continue, we feel confident that the low is in on oil. The rig count has dropped dramatically and that will allow the supply/demand imbalance to correct itself. It will take too long to fire those rigs back up and we think another drilling boom won't start until oil is back over $50, probably more like $60 a barrel.Second, CRC delivered an earnings report that beat expectations. The company reported a fourth quarter loss of $.20, which beat expectations by four cents. CRC reported revenues of $566 million, a beat of $7.67 million. This was quite amazing as we experienced worst oil market since the 1970s and the company managed to do better than Mr. Market was expecting. Some highlights of the report included annual crude oil production grew five percent to 104,000 barrels per day; annual total production increased one percent to 160,000 BOE per day; fourth quarter 2015 Adjusted EBITDAX was $226 million; proved reserves of 644MMBOE; replaced 140% of reserves, excluding price adjustments; approximately 30% of 2016 crude oil production hedged in excess of $50 per barrel; and finally, CRC will make just $50 million in capital investments this year compared to $401 million last year.Third, CRC was able to amend its credit facilities to make it through 2016. This was a major overhang on the stock and one which we felt was greatly overblown. We said that "most of the company’s debt is not due until 2020 or later. This bides the company time and allows for a recovery in oil prices to happen, which we think will occur within the next year or two." CEO Todd Stevens reassured the market when he said:

"We recently executed an amendment to our credit facilities which we believe will provide sufficient liquidity and covenant relief at current price levels throughout 2016. As we work to live within our means again in 2016, the main focus of our teams will be to protect our base production and build inventory to take advantage of any sustained price increases."

Fourth, CRC has assets it can sell. CRC has midstream assets and a power plant that will attract buyers. This will allow the company to raise cash and survive this downturn.Fifth, now that shares are back above $1, CRC no longer has to do a reverse split. This will go a long way when Occidental Petroleum (NYSE:OXY) spins off the rest of its stake in CRC. As long as shares are trading above $1, institutions and index funds are no longer forced to unload shares. A big driver taking shares to 52 week lows last month was due to institutions like Vanguard dumping shares of CRC.We still view CRC as a great long-term opportunity. However, at this point and with the recent run it's had, we recommend booking some profits at these levels. Look to buy back in on any pullback towards $1. When oil gets back to $50, our price target for CRC is $5. We will be updating Insider Financial as soon as we know more. For continuing coverage on CRC and our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in CRC and have not been compensated for this article.