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
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