U.S. energy behemoth
) received good news from the U.S. District Court for the
Southern District of New York regarding its Ecuador allegation.
The judge declared that the multi-billion dollar Ecuador judgment
is unenforceable in the U.S. on grounds of fraudulent activities
by the Ecuadorian legal team.
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The U.S. court stated that the Ecuadorian legal team had violated
the federal Racketeer Influenced and Corrupt Organizations Act
(RICO) and found Chevron's testimony convincing. The legal team,
along with the lead lawyer, Steven Donziger, has been accused of
fabricating environmental evidence, forcing scientific experts to
manipulate reports, bribing the judge and other court-appointed
experts and ghostwriting court reports. The judgment stated that
such fraudulent measures were taken to make up for the lack of
evidence against Chevron.
This long-drawn court battle dates back to Feb 2011, when a judge
in Ecuador issued an $18 billion verdict against Chevron for the
contamination of an oil field, Lago Agrio, by one of its
affiliates, Texaco Petroleum. This charge was later reduced to
The Chevron affiliate was a minority partner in an oil-production
consortium in Ecuador, along with state-controlled Petroecuador.
Chevron clarified that after the affiliate sold its stake to
Petroecuador in 1992 and completed the $40 million remediation of
the agreed properties, the government of Ecuador released Texaco
Petroleum from all liabilities. As such, Chevron too was relieved
of all liabilities associated with Lago Agrio.
The Ecuadoreans have sued Chevron in Brazil, Argentina and Canada
as well. This ruling, in favor of the company, removes at least
some overhang from Chevron's future and could be a harbinger of
more good news.
San Ramon, CA-based Chevron currently has a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked players from the energy
sector such as
Range Resources Corp.
Patterson-UTI Energy Inc.
Helmerich & Payne, Inc.
). All these stocks sport a Zacks Rank #1 (Strong Buy).