Elk Hills Oil Field

Elk Hills, San Joaquin Valley, CA, United States

Chevron awarded more than US$18 million in a contract dispute with the Department of Energy

Brief

Beginning in 1944, Chevron, U.S.A., Inc. (Chevron), and the US Government jointly operated portions of the Elk Hills Oil Field. Eventually, responsibility for the Government’s management of the field was transferred to the Department of Energy (DOE). In 1996, the DOE was required by Congress to sell its ownership interest in the oil field. Chevron and DOE agreed on a process to determine their respective ownership percentages (i.e., Equity Finalization). Chevron subsequently discovered the DOE had violated the terms of the process and that the process was tainted. As a result, Chevron alleged a breach of its contract with DOE and sought its costs of participating in the process.

What we did

HKA was retained by Chevron’s counsel to assist with analysis and review of incurred costs and establishing the causal link between the incurrence of the costs and Government’s breach. HKA experts reviewed and analyzed the documentation provided by Chevron and produced a written expert report. We also provided testimony during trial regarding Chevron’s incurred costs, the methods used to review and validate the recorded costs, as well as cost of capital. Furthermore, HKA assisted with fact witness preparation and prepared several post-trial submissions related to damages.

Outcomes

The Court found the DOE had egregiously breached the contract with Chevron on multiple occasions. The Court also found the DOE violated the implied covenant of good faith and fair dealing. Chevron was awarded more than US$18 million dollars to cover costs incurred to participate in the equity finalization process.

Project Details
  • Client
    Chevron U.S.A. Inc.
  • Value
    Confidential
  • Services
    Expert, Government Contracts
  • Sectors
    Government Contracts