Seeking to set aside what it called an “inappropriate”multi-billion verdict in which a jury awarded the State of Alabama$87 million in compensatory damages and $3.4 billion in punitivedamages over unpaid royalty fees, ExxonMobil Corp. filed an appealyesterday with the Circuit Court of Montgomery County, AL.

The case, decided last month, centered on charges that the energygiant (then Exxon, before its merger with Mobil) had underpaid up to$87.7 million in royalties on the Mobile Bay natural gas project inthe Gulf of Mexico (see Daily GPI, Dec. 20,2000). The jury said it set the damages by tripling Exxon Mobil’sannual production from 13 natural gas wells located on the Alabamacoast in the disputed time.

The long-standing contract dispute originally questioned whetheran additional $40 million in royalties was due the state andexactly how the royalties should be calculated. To date, ExxonMobilsaid it has paid Alabama $1 billion in royalties and bonus paymentsunder the lease agreement.

“ExxonMobil believes that if this verdict goes unchallenged,other legitimate businesses in the state of Alabama — businessesthat, like ExxonMobil, help expand the tax base, add to the economyand create new jobs — will also be potential targets,” thecompany said in a written statement. “Any company engaged in anopen and reasonable contract dispute in the state will not be ableto have reasonable disagreements with regulators without runningthe risk of being accused of fraud and being subjected to possiblepunitive damages.”

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