By OGJ editors
WASHINGTON, DC, Mar. 29 -- A Louisiana state jury Mar. 18 found that the former Chevron Oil Co. (now a subsidiary of ChevronTexaco Corp.) cheated Louisiana out of $82 million in oil royalties during 1987-99. The 12-member jury also ordered the company to pay $20 million in legal fees.
Louisiana's state Attn. Gen. Charles Foti said the verdict "sends a clear message" that corporations have to treat the state fairly. "It is our duty to try and protect the environment and the resources of our state. If those resources are used by companies, companies should have to pay their fair share," he said. "My office has an obligation to collect what is rightfully owed to the state."
Attorneys representing Louisiana argued that Chevron Oil's royalty payments over the 12-year period were not an accurate reflection of the oil's actual market value. Attorneys argued that Chevron Oil's listed "posted price" was deliberately undervalued to avoid making state royalty payments. The leases in question are in Bay Marchand field off Lafourche Parish in the Gulf of Mexico.
ChevronTexaco denied that the company tried to avoid making royalty payments on its leases; officials are expected to appeal although the company has not said for certain whether it will or not.
During the time in question, the company said it paid $250 million in state royalties. "We believe that the state's oil royalty payments during the time period at issue were based upon a fair price and that Chevron USA paid the state in accordance with the contractual agreements between the parties," a ChevronTexaco statement said. "At this time, Chevron USA will evaluate its appeal options and take the appropriate next steps."
Other state royalty news
An Alabama circuit court judge Monday reduced an $11.9 billion jury award against Exxon Mobil Corp. to $3.5 billion (OGJ Online, Nov.18, 2003). The state sought what it said were unpaid royalties on offshore natural gas leases in Mobile Bay. The resulting punitive damages awarded by the November jury were $2 billion higher than even the state had asked for; the judge two weeks ago refused the company's request to order a new trial or override the verdict.
ExxonMobil at the Nov. 14 judgment called the award unjustified and excessive; it repeated that assertion about the reduced award announced Mar. 29. The company said it will file an appeal within the 40 days allotted by state law. It is uncertain when or if the state Supreme Court will consider the case.
