We have studied the electronic structure of BaCoO$_3$ using soft x-ray absorption spectroscopy at the Co-$L_{2,3}$ and O-$K$ edges, magnetic circular dichroism at the Co-$L_{2,3}$ edges, as well as valence band hard x-ray photoelectron spectroscopy. The quantitative analysis of the spectra established that the Co ions are in the formal low-spin tetravalent 3$d^5$ state and that the system is a negative charge transfer Mott insulator. The spin-orbit coupling plays also an important role for the magnetism of the system. At the same time, a trigonal crystal field is present with sufficient strength to bring the 3$d^5$ ion away from the $J_{eff} = 1/2$ state. The sign of this crystal field is such that the $a_{1g}$ orbital is doubly occupied, explaining the absence of a Peierl's transition in this system which consists of chains of face-sharing CoO$_6$ octahedra. Moreover, with one hole residing in the $e_g^{\pi}$, the presence of an orbital moment and strong magneto-crystalline anisotropy can be understood. Yet, we also infer that crystal fields with lower symmetry must be present to reproduce the measured orbital moment quantitatively, thereby suggesting the possibility for orbital ordering to occur in BaCoO$_3$.
