Judge Rules for ExxonMobil in Hawkins Royalty Lawsuit.

Business Editors

IRVING, Texas--(BUSINESS WIRE)--Jan. 7, 2003

A District Court judge in Houston has ruled in favor of Exxon Mobil Corporation (NYSE:XOM) on principal claims brought by the state of Texas relating to the development of the historic Hawkins Field in Wood County.

ExxonMobil argued that the lawsuit sought to undo more than 60 years of Texas oil and gas law, and would have improperly penalized the company and others for following established rules, policies, laws and practices of the Railroad Commission, the General Land Office and the Texas Highway Commission. ExxonMobil noted that the litigation had alarming implications for other companies and for thousands of working-interest and royalty-interest owners in Texas. The Attorney General's office had stated that the state's next target would be the thousands of individuals who share in production from the Hawkins field and other unitized fields in Texas where state highway fee lands are located.

"ExxonMobil applauds the trial court's decision to reject the state's principal claims in this lawsuit," said Terry Koonce, president of ExxonMobil Production Company.

"The decision affirms ExxonMobil's position that these claims were without merit and should never have been brought against our company. Today's action reaffirms ExxonMobil's long-standing conduct in developing and producing the Hawkins field in accordance with guidance it and other producers have received from the Texas Railroad Commission and General Land Office during more than half a century. We were extremely troubled by the arbitrary manner in which the state chose to bring and pursue these claims," Koonce said.

The case was filed in January 2001 by the Texas Attorney General on behalf of the state. Significantly, none of the state agencies involved in the dispute (the General Land Office, the Railroad Commission and the Department of Transportation) chose to participate as plaintiffs. The lawsuit claimed that the state owns the minerals under portions of U.S. Highway 80 as it traverses the Hawkins field and that the state was not given an opportunity to participate in the Hawkins field unit. The suit further alleged that the state was not notified of applications filed with the state by Hawkins field operators to drill wells near the highway right of way, even though the Texas Railroad Commission approved the unit agreement and all of the well-drilling permits.

The ruling by the District Court judge rejected these charges for a variety of reasons, including the fact that the state had failed to offer any evidence that the actions enumerated in its complaint caused any damage or injury to the state.

ExxonMobil also noted that it was the only entity sued, even though other operators drilled many of the contested wells. The Hawkins Field is one of the largest oil fields ever discovered in Texas. ExxonMobil's predecessor, Humble Oil and Refining, was one of the first producers in the field.

ExxonMobil has more than 37,000 employees and retirees living in Texas. There are more than 39,000 individuals receiving royalty payments from ExxonMobil's Texas-based oil and gas production. The company pays the state more than $1 billion in royalty, severance, franchise, sales, property and payroll taxes each year. In addition, corporate and employee/retiree contributions to educational, cultural and other organizations in Texas exceed $12 million a year.