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
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.
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