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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 422.23+1.9%Jan 12 4:00 PM EST
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To: Maurice Winn who wrote (9227)9/12/2006 8:35:33 PM
From: Elroy Jetson  Read Replies (1) of 219299
 
Under American law the actual contract language controls unless it can be clearly shown that the intent of both parties was other than the contract language.

If the intent of only one party was different from the contract language, the contract language stands.

The problem with offshore west coast leases is different. Chevron knows the mammoth extent of the oil reserves these leases represent. They knew this before they bid, and so bid as much as ten times what other oils companies bid. As a result Chevron controls virtually all deep offshore leases in the West Coast of America.

I in the room when these bids were announced, and Chevron's head of production left a little early with a the comment to the head of exploration, "Well Lewis, I had best get back to work so we have enough money to pay for your largess."

There is long-standing opposition to drilling these leases, which doesn't bother Chevron for the time being. They are content to pay their annual lease payments to maintain these valuable assets, which they know will one day be drilled. Every year they wait brings better, cheaper and safer technology for deep drilling. At some point the demand for oil will intersect the safety and economy needed for west coast deep wells.

The recent problem is the Bush administration wants these leases drilled now, which Chevron doesn't want to do. Why look like an environmental outlaw today by trying to force through drilling with total public opposition? Chevron can look like the hero brining this oil to market in another couple of decades.

So Bush has been trying to force Chevron to sell back these lease, for which he has no legal basis. But much of Bush's presidency has been hallmarked by a contemptuous disregard of law.

I'm sure Chevron's leases in the gulf are easily defensible, or they would have already agreed to amend them. But Chevron will likely agree to amend the gulf leases in return for a more thorough and expanded lease agreement on the West Coast. Those leases are tens of billions of profit for Chevron in the future and they have no intention of giving them up under any circumstances, let alone to corrupt President Ooga Booga Bush.
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