Chevron (NYSE:CVX) has been sued by nearly 6,000 people so far after a refinery fire sent thousands of people to seek medical care. Some of the suits are for very small, modest amounts of money, and other are seeking more in damages.
The costs to the company could be in the hundreds millions or even top a billion -- possibly even worse.
It began with a gas leak because of corroded pipe that hadn't been replaced during maintenance last year -- while a lot of the surrounding pipe had been.
The leak put quite a few workers in serious harm's way, though only 5 were treated for minor injuries. Still, people in the surrounding area were impacted with a variety of symptoms, leading people to seek medical attention.
San Jose Mercury News reports:
"Area hospitals told CSB investigators that they attribute hundreds of emergency room visits by community members to reported effects of the release and fire, with symptoms ranging from anxiety to respiratory distress," said CSB board member Mark Griffon, who was accompanying the team of seven investigators that arrived in Richmond on Wednesday.
A lot of people are taking the small cash the company is offering them, but others are gunning for a big payday, though it'll be expensive and difficult to obtain. SF Gate found someone looking for such a payday:
One man who identified himself only as "Cowboy" glared at the line and said he was shooting for a bigger payday. "Why would a man sign up with the man who's killing you and ask for money?" he said. "I have diarrhea and my baby's been throwing up. I'm going to get a lawyer, and I'm going to take these people for all I can. "These claims are just a small stipend for dumb people."
Will he find it? Maybe, but probably not. Vultures who get excited over an upset stomach and want to make millions from it are going to have a tough time convincing the judge that their injuries warrant untold millions. But still, that's the nature of the system -- you never know.
Does this mean much for the stock itself? Honestly, it could cost them a billion or two if the worst happens. That's nothing to sneeze at, and it could push the price down slightly.
But a penalty of this level isn't going to sink the company that has a market cap of $220+ billion and revenue of $61 billion. Even if there is some sort of ding, it's not a fundamental change in the slightest.
But rather than it being something bad, it's nothing more than a buying opportunity, because Chevron is an amazing company right now because it's set up to benefit from the natural gas boom that's inevitable, pays a great dividend (yielding roughly 3.17%), has strong assets that are just going to be worth more every year from here on out, and is probably my "favorite" company to invest in today.
Investors shouldn't be worried, though it's important to keep up with all of these lawsuit scenarios.
Disclosure: I am long CVX.