An Alabama jury on Friday returned an $11.9 billion judgment against Exxon Mobil Corp. over disputed natural gas royalties. The jury, which deliberated after a four-week trial, awarded the state $63.6 million in compensatory damages and $11.8 billion in punitive damages. The award was more than $9.3 billion than Alabama’s attorneys had asked for.
Alabama originally sued Exxon, along with Shell Oil Co. and Hunt Petroleum Corp. in 1999, charging the companies with violating lease provisions for natural gas wells in state waters along the coast (see NGI, April 29, 2002; March 25, 2002). In the Exxon Mobil lawsuit, Alabama’s Montgomery County Circuit Court originally awarded the state $3.5 billion in punitive damages. At the time of the $3.5 billion judgment, the jury said it set the damages by tripling Exxon Mobil’s annual production from 13 gas wells located on the coast during the disputed time. Alabama officials accused Exxon of cheating the state out of millions of dollars by intentionally deducting too many expenses for operating the wells.
Exxon Mobil (formerly Exxon Corp.) and Alabama have argued about the lease royalty amounts since 1995. Alabama consultants estimated that the underpayments and unpaid interest totaled $87.7 million. However, Exxon Mobil said the amount was less, if anything at all. Wells that Mobil Corp. developed along the Alabama coast before it merged with Exxon are not part of the dispute.
Jury foreman Joe King said the jurors “felt Exxon thought they were going to get away with this.” He said, “We wanted to send a message that they were not, and that this corporation can’t get away with doing wrong.”
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