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Court Case Lowers Chevron's 1998 Earnings

Court Case Lowers Chevron's 1998 Earnings

Chevron announced late Friday it adjusted its 1998 earnings to accommodate $637 million in "potential losses" due to an Oklahoma Supreme Court decision last week affirming a lower court's ruling against the integrated oil and gas company. Chevron said it still plans to seek aggressive review of the case.

The Oklahoma Supreme Court upheld a Tulsa district judge's 1996 ruling finding Chevron guilty of breach of contract. The case stems from an incident in 1982 when Gulf, now owned by Chevron, terminated plans to acquire Cities Service Co., a Tulsa oil company, which proceeded to file a breach of contract lawsuit. Cities Service, now owned by Occidental Petroleum, was awarded compensation of $230 million and $512 million in accrued interest. Occidental said the award was the largest in state history. The reduction in Chevron's earnings is a direct result of the after-tax effect of this charge.

The change reduces Chevron's 1998 totals from $1.976 billion in net income to $1.339 billion. Fourth quarter net income was reduces from a profit of $431 million to a loss of $206 million.

"There were numerous errors in the trial proceedings, and those errors resulted in a miscarriage of justice,'' said Ken Derr, CEO of Chevron Corp. "That's why we find the Oklahoma Supreme Court ruling so shocking."

One potential move, a Chevron official said, would be to request the Oklahoma Supreme Court to review its own decision. Both companies declined to comment further until the ruling could be reviewed.

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