ExxonMobil on Tuesday filed an appeal with the Alabama Supreme Court challenging a $3.5 billion punitive damage award concerning royalties the state argues it is owed by the oil major for offshore natural gas leases.
The lawsuit has been ongoing for about five years. Following the $11.8 billion damage award to the state last year, an Alabama circuit court judge in March reduced the award against ExxonMobil by 75% to $3.5 billion (see Daily GPI, March 30). The original l999 lawsuit against predecessor company Exxon Corp. alleges it was underpaid royalties due from gas wells drilled in state waters around Mobile Bay. The original damage award was the largest award handed down by a jury in the United States in 2003.
ExxonMobil on Tuesday called the punitive judgment “still excessive and unjustified,” and said the amount was “clearly contrary to guidelines established by recent U.S. Supreme Court decisions on punitive damage awards.” Since production began at Mobile Bay, ExxonMobil estimated that it has directly paid Alabama more than $1 billion in royalty and lease payments.
Stuart McGill, president of ExxonMobil Production Co. in Houston, said the company’s “conduct was absolutely proper and lawful, and we look forward to the opportunity to present the facts of this case to the Alabama Supreme Court.”
Meanwhile, the U.S. Minerals Management Service announced Tuesday it had awarded ExxonMobil the SOAR award for excellence in offshore operational safety and environmental compliance; excellence in mineral revenues payment, reporting and compliance and for superior partnership efforts with the federal government. (see related story)
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