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Chevron wins California oil field contract dispute lawsuit

The U.S. Court of Claims has handed down a 90-page ruling in favor of Chevron Corp in a contract dispute lawsuit against the federal government. The suit was filed by Chevron in 2004 after the company and the U.S. Department of Energy could not come to an agreement on how to split the holdings of the Elk Hills Reserve of California. In the ruling, the judge awarded Chevron unspecified damages for the government's "bad faith conduct."

The Elk Hills Reserve of California has been jointly operated by Chevron and the Department of Energy for over 50 years. It consists of over 47,000 acres of land near Bakersfield, over 1,000 oil wells, a power plant and two gas-processing units. There is believed to be about 1 billion barrels of oil on reserve and the government says they have a 78 percent share of Elk Hills. This is what Chevron disputed and why the company filed the lawsuit.

Chevron and the government agreed to sell the government's stake in Elk Hills to Occidental Petroleum Corp for $3.65 billion back in 1997. Chevron and Occidental Petroleum Corp do not work the oil field together. The exact split of the holdings was to be determined, but the two entities could not come to an agreement. The judge has now ordered the government to pay a sanction of 42 percent of Chevron's legal fees since the suit was filed in 2007, in addition to the unspecified damages. The judge called the sanction a response to the government's "bad faith litigation tactics."

You don't have to be a giant corporation to need the representation of an experienced California contract dispute attorney. When you are a party in a business contract and the other side is not abiding by the contract, make sure your rights and assets are protected by contacting an attorney to see what your options are in this complex area of business law.

Source:  bloomberg.com, "Chevron Wins Suits Against U.S. Over California Oil Field" Andrew Zajac and Tom Schoenberg, May. 09, 2013

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