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Chevron wins U.S. ruling on Ecuador's $19B pollution judgment
Mar 4 2014, 10:21 ET

Chevron (CVX +0.5%) wins a U.S. judge’s ruling that a multibillion-dollar pollution judgment issued in Ecuador was obtained by fraud, making it less likely that plaintiffs will succeed in collecting the $9.5B award from the company.

The U.S. district judge in Manhattan says CVX provided enough evidence that plaintiffs secured the 2011 judgment by bribing a judge and ghostwriting court documents.

Ecuadorean villagers and activists working on their behalf argue CVX
should be held financially responsible for pollution of the Amazon rainforest by Texaco from the 1960s through the 1990s, and an Ecuadorean court ordered the company to pay $19B, which was later reduced to $9.5B.
Chevron Wins U.S. Ruling Calling Ecuador Judgment Fraud
By Christie Smythe Mar 4, 2014 11:41 PM GMT+0800

Chevron Corp. (CVX) won a U.S. judge’s ruling that a multibillion-dollar pollution judgment issued in Ecuador was procured by fraud, making it less likely that plaintiffs will collect the $9.5 billion award.

U.S. District Judge Lewis Kaplan in Manhattan said today that the second-largest U.S. oil company provided enough evidence that plaintiffs secured the 2011 judgment on behalf of rain forest dwellers in the country’s Lago Agrio area by bribing a judge and ghostwriting court documents. Kaplan oversaw a seven-week nonjury trial over Chevron’s allegations.

“The decision in the Lago Agrio case was obtained by corrupt means,” Kaplan said in the opinion. “The defendants here may not be allowed to benefit from that in any way.”

Chevron, based in San Ramon, California, was ordered to pay $19 billion to a group of farmers and fishermen by the Ecuadorean court. The award was reduced to $9.5 billion on Nov. 12 by the Ecuadorean National Court of Justice, the nation’s highest tribunal.

The Ecuadorean villagers, and activists working on their behalf, argue the oil producer should be held financially responsible for pollution of the Amazon rainforest by Texaco Inc. from the 1960s through the early 1990s. Chevron, which bought Texaco in 2001, claims the company already paid $40 million to clean up its share of the drilling contamination.

Pending Cases

The Ecuadoreans have sued Chevron in Brazil, Argentina and Canada, where the company has assets that can be seized. The Court of Appeal for Ontario ruled in December that the 47 villagers have the right to pursue Chevron’s Canada assets. The other cases are pending.

In its racketeering case before Kaplan, Chevron alleged that a U.S. lawyer leading the Ecuadoreans, Steven Donziger, and members of his team engaged in “repeated acts of fraud, bribery, money laundering” and obstruction of justice in pursuit of a multibillion-dollar payout.

The company said that Donziger’s team bribed a judge who issued the decision with a promise of $500,000 from the proceeds, ghostwrote the ruling and arranged to have their own damages estimate submitted as independent findings to the court.

Aggressive Tactics

“This trial record proved what Chevron has been saying all along -- that Donziger, who professes merely to be a lawyer representing clients, is, in reality, a liar, con man, and criminal who has headed a racketeering enterprise targeting Chevron as its deep-pocketed victim,” Chevron lawyers said in a memorandum filed Dec. 23.

Randy Mastro, a lead lawyer for Chevron, didn’t immediately respond to a request for comment today. Donziger said he didn’t have an immediate comment and plans to release a statement later today.

Donziger has argued that he did nothing wrong in Ecuador and that any aggressive tactics he may have used were no worse than Chevron’s actions. Han Shan, a spokesman for the plaintiffs, described them as being “out-gunned on a profound level” against the oil company.

“The court assumes there is pollution in the Oriente,” Kaplan wrote, referring to the area of Ecuador where drilling occurred. “The issue here is not what happened in the Oriente more than twenty years ago and who, if anyone, now is responsible for any wrongs then done. It instead is whether a court decision was procured by corrupt means, regardless of whether the cause was just.”

Trial Lawyers

During the trial, Chevron was represented in the courtroom by 10 lawyers, including seven partners, from Gibson Dunn & Crutcher LLP. Donziger’s team included a group of volunteers and trial lawyers Zoe Littlepage and Richard Friedman, who told Kaplan they were working for discounted fees.

Appellate lawyer Deepak Gupta joined Donziger’s team after the trial concluded. Donziger has said he intends to challenge any judgment issued against him by Kaplan.

Chevron sought to show that its adversaries weren’t lacking in resources, eliciting testimony that they received more than $30 million from sources such as a Pennsylvania trial lawyer, an Internet gambling entrepreneur who was friends with Donziger, and specialty financing firms.

One of the investment firms, Burford Capital (BUR) Ltd., backed out of a commitment to fund the litigation after learning about fraudulent activities by Donziger, Chevron alleged.

Some celebrities supported the campaign against Chevron, including Trudie Styler, who founded the Rainforest Foundation with her husband, musician Sting, and helped to start a project to make clean water available to forest inhabitants in Ecuador. Styler attended some of the New York court proceedings, bringing her husband to watch Donziger testify.

Voiced Support

Actress Mia Farrow and actor Danny Glover also voiced support for the campaign, and the case was featured in a documentary, “Crude,” by filmmaker Joe Berlinger. Chevron won access to hundreds of hours of outtakes from the film, which it contended showed Donziger acting inappropriately.

The company said in a Jan. 21 brief filed with the Manhattan court that it spent more than $10 million gathering evidence to build the racketeering case against Donziger.

Donziger, a Harvard Law School graduate, joined the case in a junior role in the late 1990s and gradually rose to a position as a strategist and fundraiser. He contends that Ecuador-based lawyers are now in charge of the case.

The racketeering case is Chevron Corp. v. Donziger, 11-cv-00691, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christie Smythe in Brooklyn at

To contact the editor responsible for this story: Michael Hytha at
Insider buys
Director Robert E. Denham. on February 14, 2014

Denham invested $226,817.20 into 2,000 shares of CVX, for a cost per share of $113.41.
Short interest has dropped considerably

Put Options market point to $110 for Mar, Apr 2014
That will be a nice point to pick

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Chevron's (NYSE: CVX) Annual Analyst Meeting Warns of Lingering Shifts in LNG Prices, Oil Prices

By Tara Clarke, Associate Editor, Money Morning ·
March 11, 2014 ·

Chevron (NYSE: CVX), the nation's second-largest oil company and the world's fourth-largest energy producer by market value, cut expectations for its 2017 production by 6.1% at its annual security analyst meeting today (Tuesday), citing a drop in LNG prices and an increase in oil prices.

Over the last several months, the petrochemical company, along with industry competitors, has been shelling out huge amounts of cash to raise natural gas and oil production.

For instance, on Dec. 13, Chevron announced a $39.8 billion capital and exploratory investment program for 2014 - that's 12% more spending in those areas than Chevron committed last year.

But now production is being stymied by lower liquefied natural gas (LNG) prices.

"Our growth strategy remains intact, though some things have changed," Chevron Chairman and Chief Executive Officer John Watson said at the meeting today.

CVX has curtailed work on its Marcellus shale formation development because it's become less economical to extract fuel.

Last week, we saw LNG prices drop Exxon Mobil's 2017 production output by 500,000 barrels of oil equivalent per day (boepd). The largest U.S. oil company specifically cited the cause as a decrease in spending on North American natural gas.

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Meanwhile, higher crude oil prices have a negative impact on output - production agreements in some nations entitle its partners to a higher share when oil prices go up, diminishing the company' share.

"When prices increase, it's just arithmetic at that point," Watson said.

Chevron expects the trend in oil prices to continue. It's adopted a new price assumption of approximately $110 per barrel - a 39% increase from its previous forecast of $79 per barrel.

Here are the other highlights from today's meeting:

CVX cut its production outlook from 3.3 million boepd by 2017 to 3.1 million boepd.

Chevron projects $10 billion in asset sales over the next three years. The company says more than 80% of the sum will involve upstream asset sales, as it nears the end of rationalising its downstream portfolio. Compare this to $7 billion taken between 2011 and 2013, with a little over $2 billion of that coming from the upstream sector.

It still intends to spend around $40 billion this year on capital projects, including gas-export terminals and offshore crude platforms, with a goal of reversing a three-year drop in production.

The company plans to increase drilling in the U.S. Permian Basin by 8.6% this year to 505 wells. Its production from the formation that straddles the Texas-New Mexico border is projected to double by the end of 2020.

Chevron is the only company forecasting a production increase in 2014 among the world's three-largest energy companies, according to the slides.

"We believe this compelling growth profile, combined with flattening capital spending levels these next few years, should serve as a strong catalyst for value creation for our shareholders in the years ahead," Watson said.

"What underpinned the original growth estimate we talked about is still there. The best investments produce strong earnings and cash margins, which in turn sustain a strong balance sheet."

Chevron scored the third spot on the latest Fortune 500 list by pulling in $233.9 billion in revenue in fiscal 2012.

"I think Chevron's management is in tune with the reality of the energy markets, perhaps better than most," Money Morning Chief Financial Strategist Keith Fitz-Gerald remarked.

Chevron stock closed down 1.15% Tuesday at $114.51 per share. It has a 52-week low of $109.27 per share, and a high of $116.23 per share.
Chevron misses by $0.11, misses on revenue • 8:31 AM

Chevron (CVX): Q1 EPS of $2.36 misses by $0.11.
Revenue of $53.26B (-6.3% Y/Y) misses by $1.21B.