Although negotiators for Texaco and Pennzoil suspended their formal talks this week, unofficial bargaining is continuing that could produce an out-of-court agreement within a week on an alternative to Pennzoil's $11.1-billion legal judgment against Texaco, an official involved in the talks said Friday.
The two companies are discussing "a number of possible alternatives," the source said, stressing that it is not clear that could yield an out-of-court settlement. He said he did not expect an agreement until next week.
Adding to the speculation that a settlement may be near, Texaco and Pennzoil have reserved time next Thursday in a federal court in Texaco's home turf, White Plains, N.Y., for the resumption of a hearing on whether to bar enforcement of the damage award. An earlier hearing Dec. 21 had been adjourned by U.S. District Judge Charles L. Brieant, who said he wanted to defer his decision "in the interests of fairness to both parties and so as not to impede" the progress of the private talks.
"This resulted from both parties wanting to know when the judge was next available," a Texaco spokesman said. A court clerk said the companies are not obligated to use the reserved time. Similar time had been set aside informally last Thursday, but Texaco and Pennzoil did not ask to use it.
The Wall Street Journal reported Friday that Pennzoil is preparing for a board meeting next week to discuss the prospects for settlement, but a Pennzoil spokesman declined to comment on such a possibility.
A Texas jury awarded Houston-based Pennzoil the record judgment in November after a jury found that Texaco illegally interfered with Pennzoil's proposed acquisition of Los Angeles-based Getty Oil when it stepped in and bought the firm itself in early 1984. Texaco has said the judgment could jeopardize its financial survival.
In an effort to bring a quick end to what could become years of legal wrangling, the two companies have been meeting privately over the past few weeks.
Industry sources have speculated that if there is an agreement, it will be one in which giant Texaco agrees to transfer oil reserves to Pennzoil, which had sought Getty as a means of expanding its domestic supply of oil.
California's huge Kern River oil field, which had been among Getty's prime assets, is widely seen as "a keystone to the negotiations," an oil industry source in Houston said.