Chevron 2015 Annual Report Download - page 55

Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
that are available to Chevron and Texpet as a result of that breach. Phase Two issues were addressed at a hearing held in
April and May 2015. The Tribunal has not set a date for Phase Three, the damages phase of the arbitration.
Company’s RICO Action Through a series of U.S. court proceedings initiated by Chevron to obtain discovery relating to the
Lago Agrio litigation and the BIT arbitration, Chevron obtained evidence that it believes shows a pattern of fraud, collusion,
corruption, and other misconduct on the part of several lawyers, consultants and others acting for the Lago Agrio plaintiffs.
In February 2011, Chevron filed a civil lawsuit in the Federal District Court for the Southern District of New York against
the Lago Agrio plaintiffs and several of their lawyers, consultants and supporters, alleging violations of the Racketeer
Influenced and Corrupt Organizations Act and other state laws. Through the civil lawsuit, Chevron is seeking relief that
includes a declaration that any judgment against Chevron in the Lago Agrio litigation is the result of fraud and other
unlawful conduct and is therefore unenforceable. On March 7, 2011, the Federal District Court issued a preliminary
injunction prohibiting the Lago Agrio plaintiffs and persons acting in concert with them from taking any action in
furtherance of recognition or enforcement of any judgment against Chevron in the Lago Agrio case pending resolution of
Chevron’s civil lawsuit by the Federal District Court. On May 31, 2011, the Federal District Court severed claims one
through eight of Chevron’s complaint from the ninth claim for declaratory relief and imposed a discovery stay on claims one
through eight pending a trial on the ninth claim for declaratory relief. On September 19, 2011, the U.S. Court of Appeals for
the Second Circuit vacated the preliminary injunction, stayed the trial on Chevron’s ninth claim, a claim for declaratory
relief, that had been set for November 14, 2011, and denied the defendants’ mandamus petition to recuse the judge hearing
the lawsuit. The Second Circuit issued its opinion on January 26, 2012 ordering the dismissal of Chevron’s ninth claim for
declaratory relief. On February 16, 2012, the Federal District Court lifted the stay on claims one through eight, and on
October 18, 2012, the Federal District Court set a trial date of October 15, 2013. On March 22, 2013, Chevron settled its
claims against Stratus Consulting, and on April 12, 2013 sworn declarations by representatives of Stratus Consulting were
filed with the Court admitting their role and that of the plaintiffs’ attorneys in drafting the environmental report of the mining
engineer appointed by the provincial court in Lago Agrio. On September 26, 2013, the Second Circuit denied the defendants’
Petition for Writ of Mandamus to recuse the judge hearing the case and to collaterally estop Chevron from seeking a
declaration that the Lago Agrio judgment was obtained through fraud and other unlawful conduct.
The trial commenced on October 15, 2013 and concluded on November 22, 2013. On March 4, 2014, the Federal District Court
entered a judgment in favor of Chevron, prohibiting the defendants from seeking to enforce the Lago Agrio judgment in the
United States and further prohibiting them from profiting from their illegal acts. The defendants appealed the Federal District
Court’s decision, and, on April 20, 2015, a panel of the U.S. Court of Appeals for the Second Circuit heard oral arguments.
Management’s Assessment The ultimate outcome of the foregoing matters, including any financial effect on Chevron,
remains uncertain. Management does not believe an estimate of a reasonably possible loss (or a range of loss) can be made in
this case. Due to the defects associated with the Ecuadorian judgment, the 2008 engineer’s report on alleged damages and the
September 2010 plaintiffs’ submission on alleged damages, management does not believe these documents have any utility
in calculating a reasonably possible loss (or a range of loss). Moreover, the highly uncertain legal environment surrounding
the case provides no basis for management to estimate a reasonably possible loss (or a range of loss).
Note 18
Taxes
Income Taxes Year ended December 31
2015 2014 2013
Income tax expense (benefit)
U.S. federal
Current $ (817) $ 748 $ 15
Deferred (580) 1,330 1,128
State and local
Current (187) 336 120
Deferred (109) 36 74
Total United States (1,693) 2,450 1,337
International
Current 2,997 9,235 12,296
Deferred (1,172) 207 675
Total International 1,825 9,442 12,971
Total income tax expense (benefit) $ 132 $ 11,892 $ 14,308
Chevron Corporation 2015 Annual Report 53