ExxonMobil fights jury's $3.5-billion verdict

World Oil, Feb, 2001

A jury in Montgomery, Alabama found ExxonMobil guilty of deliberately duping the state out of $1 billion in royalties from 13 natural gas wells that the oil company drilled in the state's coastal waters. The jury ordered ExxonMobil to pay $87.7 million in actual damages and $3.42 billion in punitive damages.

It is the largest punitive damage verdict ever returned by an Alabama jury. However, the state and its attorneys may have to wait years before seeing the money because ExxonMobil plans to appeal the decision, and the case is likely to go all the way to the U.S. Supreme Court. ExxonMobil claims that its lease on the gas reserves allows it to deduct production costs from royalties due, and that "this dispute is, and always has been, one between ExxonMobil and the (Conservation) Department over the proper interpretation of a lease form never before used in any U.S. Jurisdiction." On the other hand, Alabama's special assistant attorney general, Robert Cunnigham, stated that officials "discovered numerous wri tten documents from ExxonMobil disclosing that the oil firm knew what they were supposed to pay."