ExxonMobil to fight Texas royalty suit

ExxonMobil Corp. will fight a Texas lawsuit alleging it wrongly failed to pay royalties from a field over a 25-year period. It called the allegations 'unfathomable,'and called the request for punitive damages 'ridiculous and illogical.' On Thursday, Texas Atty. Gen. John Cornyn filed the suit requesting payment. Although it was unclear how much was due, the amount asked for was 'in the tens of millions.'

Jan. 5, 2001

2 min read

ExxonMobil Corp. will fight a Texas lawsuit alleging it wrongly failed to pay royalties from a field over a 25-year period. It called the allegations "unfathomable," and called the request for punitive damages "ridiculous and illogical."

On Thursday, Texas Atty. Gen. John Cornyn filed the suit, which seeks damages "in the tens of millions" of dollars

ExxonMobil said the suit involved Hawkins field in the southeastern tip of Wood County. The field was discovered in 1940, and Texas approved the unitization in 1975, said ExxonMobil.

Texas owns 50 acres of right-of-way along US Highway 80, which runs through the field. The oil company apparently did not pay any royalties, but claimed it was not required to.

ExxonMobil said the state Highway Department's policy from 1975-1985 was to refrain from leasing of mineral leases under highway rights of way. It said that though in 1985 the Texas legislature passed a statute authorizing the state to lease these rights of way, the statute excluded all existing rights of way within 2,500 ft of producing wells.

The company said in 1996 ExxonMobil determined the state's rights of way were within 2,500 ft of producing wells and are thus were exempt.

It said, "Our position on this issue was communicated in a letter to the state at that time. No response to this communication was ever received. Furthermore, we are not aware of any producing wells that are located under the state highway tract."

The company said although it had thoroughly examined the suit, "It appears that the state of Texas has also chosen to bring a suit over the unitization of Hawkins field with regard to facts that were apparent to the state 25 years ago.

"The unit map filed during the unitization clearly showed Highway 80 traversing the Hawkins field Unit. It was apparent in 1975 to anyone driving on Highway 80 near Hawkins that the highway was in the middle of an oil field. For the state of Texas to claim 25 years later that it was not aware of the unitization is unfathomable; the state approved it."