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Court Case Lowers Chevron’s 1998 Earnings
Chevron announced late Friday it adjusted its 1998 earnings toaccommodate $637 million in “potential losses” due to an OklahomaSupreme Court decision last week affirming a lower court’s rulingagainst the integrated oil and gas company. Chevron said it stillplans to seek aggressive review of the case.
The Oklahoma Supreme Court upheld a Tulsa district judge’s 1996ruling finding Chevron guilty of breach of contract. The case stemsfrom an incident in 1982 when Gulf, now owned by Chevron,terminated plans to acquire Cities Service Co., a Tulsa oilcompany, which proceeded to file a breach of contract lawsuit.Cities Service, now owned by Occidental Petroleum, was awardedcompensation of $230 million and $512 million in accrued interest.Occidental said the award was the largest in state history. Thereduction in Chevron’s earnings is a direct result of the after-taxeffect of this charge.
The change reduces Chevron’s 1998 totals from $1.976 billion innet income to $1.339 billion. Fourth quarter net income was reducesfrom a profit of $431 million to a loss of $206 million.
“There were numerous errors in the trial proceedings, and thoseerrors resulted in a miscarriage of justice,” said Ken Derr, CEOof Chevron Corp. “That’s why we find the Oklahoma Supreme Courtruling so shocking.”
One potential move, a Chevron official said, would be to requestthe Oklahoma Supreme Court to review its own decision. Bothcompanies declined to comment further until the ruling could bereviewed.
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