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Elk Hills Oil Field

Americas

Chevron awarded more than US$18 million in a contract dispute with an energy regulatory body

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 energy regulatory body. In 1996, the energy regulatory body was required by Congress to sell its ownership interest in the oil field. Chevron and the energy regulatory body agreed on a process to determine their respective ownership percentages (i.e., Equity Finalization). Chevron subsequently discovered the energy regulatory body had violated the terms of the process and that the process was tainted. As a result, Chevron alleged a breach of its contract with the energy regulatory body 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 the Government’s breach. HKA experts reviewed and analysed 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 energy regulatory body had egregiously breached the contract with Chevron on multiple occasions. The Court also found the energy regulatory body 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 finalisation process.

"HKA experts reviewed and analysed the documentation provided by Chevron and produced a written expert report. We also provided testimony during the trial regarding Chevron’s incurred costs, the methods used to review and validate the recorded costs, as well as the cost of capital."
Project Details
  • Client
    Chevron U.S.A. Inc.
  • Value
    Confidential
  • Services
    Government Contracts
  • Sectors
    Resources