ExxonMobil Responds to Texas Attorney General Lawsuit; Cites 100 Years of Texas Legal History

Business Wire, Feb 5, 2001

Business Editors

IRVING, Texas--(BUSINESS WIRE)--Feb. 5, 2001

ExxonMobil (NYSE:XOM) filed today its response to a lawsuit initiated by the Texas Attorney General related to the Hawkins Field, an historic oil field located in the southeastern portion of Wood County.

The company cited public evidence covering 100 years of Texas legal history and various legal authorities that clearly substantiate ExxonMobil's position that the Attorney General's claims are groundless.

The case involves the State's claimed mineral rights underlying 51 acres of right of way for Texas Highway 80 running through the Hawkins Field. Deeds to the 51 acres were acquired by the State in the 1930's. "We believe there is a question regarding whether these deeds in fact covered mineral rights versus basic surface rights," said Ken Cohen, ExxonMobil's vice president of Public Affairs. "But that said, we note that in the approximately 70 years the State has claimed to own the tracts, the State never attempted to lease the acreage for oil and gas development nor to drill its own wells to recover reserves beneath the tracts."

In his lawsuit, Attorney General John Cornyn alleged that ExxonMobil, as operator of the Hawkins Field, "...wrongfully and knowingly drained minerals from the property in which the state of Texas owns the mineral rights."

In its response, ExxonMobil describes the State's long history of not leasing mineral rights below state highways. It notes that the Texas Attorney General, in a 1940 opinion, concluded that State highway rights-of-way lands cannot be leased by the State Highway Commission for oil and gas purposes until specifically authorized by the Legislature.

In 1985, the Legislature passed a statute authorizing the state to lease highway rights of way, but the statute specifically excluded all existing rights of way within 2,500 feet of wells producing on January 1, 1985. ExxonMobil notes in its response that all of the state highway rights of way traversing the Hawkins Field unit at that time were already within 2,500 feet of producing wells. "This is an important point because under State law, state mineral lands cannot be included in fieldwide oil and gas units unless they are under lease," Cohen said.

Ten years prior to the statute (1975), the field was unitized, a process by which interest owners in the field agree to join their interests for the common benefit of efficient field management. This unitization process involved public notices and hearings, and was supervised and ultimately approved by the Texas Railroad Commission.

The Attorney General claims that ExxonMobil did not provide proper or adequate notice to the State of Texas of Exxon's application and hearing for unitization. According to Cohen, "The public record squarely contradicts this claim." During the unitization process the company requested that the Texas Railroad Commission notify the Commissioner of the Texas General Land Office of the unitization effort despite the long-standing policy at that time against the state leasing its highway properties. Following completion of the two-year process, all three statewide elected officials serving on the Railroad Commission approved the unit agreement on January 1, 1975.

"ExxonMobil, as well as our more than 34,000 active employees and retirees in Texas, have been important and responsible participants in the development of our state's natural resources. As the company's response shows, our activities in the Hawkins Field have complied with the laws and policies of Texas. We believe the facts support a speedy resolution of the case," Cohen said.