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Texas Sues ExxonMobil For Oil, Gas Royalties

Texas Sues ExxonMobil For Oil, Gas Royalties

Texas Attorney General John Cornyn filed a civil lawsuit last week against ExxonMobil of stealing millions of dollars in oil and gas revenue from land owned by the state's taxpayers. Cornyn accused the company of defrauding Texas for at least 25 years by "knowingly and wrongfully" producing oil and gas from 50 acres of publicly owned right-of-way property in East Texas.

The lawsuit, filed in U.S. District Court in Houston, seeks royalty payments plus interest, as well as punitive damages. No criminal charges were alleged. According to the filing, Texas is owed royalties in an oil field first discovered in 1940. In 1974, ExxonMobil obtained permission from the Texas Railroad Commission to operate the field as a single unit, which allowed all of the landowners to share in the proceeds from the oil, gas and other recovered minerals.

At the time, ExxonMobil promised that the rights of every mineral interest owner would be protected, Cornyn said. However, the state never received its rightful share of the proceeds, he said.

"They acted as if the State of Texas did not exist and took the state's interest and put it in their pocket," Cornyn said. "As a result, we believe that Exxon owes the State of Texas tens of millions of dollars in the proceeds from the oil that was wrongfully took, as well as interest on those sums."

The lawsuit is similar to a court case in Alabama where a jury in December returned a $3.5 billion verdict against ExxonMobil for not paying royalties on wells off the coast (see NGI, Dec. 25, 2000).

ExxonMobil officials said the newest lawsuit stemming from royalty payments was "groundless," and then criticized Cornyn for using the courts to resolve the dispute instead of using negotiation with the company. ExxonMobil also said it would wage a "vigorous" defense.

"It appears we must now add officials of the State of Texas to the growing list of litigious public officials more interested in headlines than meaningful resolution to business matters," ExxonMobil said in a prepared statement.

Carolyn Davis

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