Oil

Thursday, Apr 04 2013 05:56 PM

Lawsuit accuses Chevron of underpaying royalties

BY JOHN COX Californian staff writer jcox@bakersfield.com

A lawsuit filed last month accuses Chevron of fraudulently underpaying oil royalties to a family trust based in San Luis Obispo County.

If the suit achieves the class-action status it seeks, it could extend to royalty owners in Kern and Fresno counties.

The suit claims that the San Ramon-based company -- Kern's leading oil producer -- has intentionally violated the terms of its longstanding royalty agreement with The Melissa D. Duflock Revocable Trust. The trust owns land in Monterey County's San Ardo Oil Field, which is one of many areas where Chevron produces oil.

Chevron dismissed the charges as "baseless allegations and unsubstantiated lawyer rhetoric."

"Chevron is committed to meeting the highest ethical standards in all of our business dealings," a company spokeswoman wrote in an email Thursday.

The suit filed March 22 in San Luis Obispo County Superior Court alleges that the company and its predecessors at the San Ardo leases, including Texaco Inc. and Unocal Corp., knowingly miscalculated, underreported and undervalued the oil they produced at the trust's leases. Any such problems would likely affect how much money the companies owe the trust.

"The computation that Chevron has undertaken, and by extension, what they pay people, seems questionable at best and below market at worst," said Matt Edling, a Burlingame lawyer who is one of two attorneys representing the family trust.

Edling added that he believes the lawsuit is the first oil royalty case against Chevron in state history.

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