Chevron announced last week it has filed a petition asking theU.S. Supreme Court to hear a $742 million breach-of-contract casefirst brought against Gulf Oil Co. in 1982 by Cities Service Co.,which was bought by Occidental in 1984. Dawn Soper, a Chevronspokesperson, said it is now up to the court to rule on thepetition.

“There were grievous errors in the Oklahoma proceedings and webelieve this petition is based on strong arguments worthy of U.SSupreme Court consideration,” said Ken Derr, Chevron Corp. CEO.Chevron has said it would petition the Supreme Court since lastJune. On March 2, the Oklahoma Supreme Court upheld the Oklahomatrial court’s 1996 damage award of $742 million from the allegedbreach of contract. Chevron filed a brief asking the state supremecourt to reconsider, but was denied. In its filing with the SupremeCourt, Chevron contends that the trial judge improperly precludedChevron from proving its main defense and the court proceedings inOklahoma failed to ensure due process.

“There were numerous errors in the trial proceedings, and thoseerrors resulted in a miscarriage of justice,” said Derr after theMarch 2 hearing. “That’s why we find the Oklahoma Supreme Courtruling so shocking.”

The case dates back to 1982 when Cities Service Co., a Tulsa oilcompany, filed suit against Gulf Oil Corp. after Gulf terminated anagreement to merge with Cities, which was trying to avoid a hostiletakeover by Mesa Petroleum. Cities Service was subsequentlyacquired by Occidental Petroleum in 1982 and Gulf was acquired byChevron in 1984.

At the time, Cities repurchased $225.5 million worth of itsstock from Mesa, in order to merge with Gulf. The Oklahoma trialcourt ruled that Chevron should pay Occidental the $225.5 million,plus $542 million in subsequent interest.

John Norris

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