JURY TO HEAR TESTIMONY IN EXXON SUIT

The Montgomery Advertiser

A jury could hear testimony Tuesday in lawsuit over $132 million in oil and gas royalties that Alabama officials seek from Exxon Corp.'s leased tracts in the Gulf of Mexico.

Exxon previously sued the state, asking Montgomery County Circuit Judge Tracy McCooey to declare the company did not owe more royalties and interest. The state responded with a countersuit.

Jury selection in the state's suit begins Monday and is expected to take up the day.

State officials allege that Exxon has not paid the state all the royalty interest payments it's owed on the natural gas pumped from offshore state land since 1993.

"We're glad to be on this side of this lawsuit seeking millions of dollars instead of having to pay millions of dollars," said Ted Hosp, legal adviser to Gov. Don Siegelman.

According to two audits, Exxon owes $132.1 million in royalties and interest- $50.5 million for a period from October 1993 to December 1995 and $81.6 million from January 1996 to December 1997.

Exxon attorneys contend the audits are "fundamentally flawed, incorrect, mistaken and invalid, and without support in fact, law and or the language of the subject leases."

Mobile attorney John T. Crowder, representing the state Department of Conservation and Natural Resources, which filed the lawsuit, declined to comment on the pending litigation.

The state claims Exxon violated its contract with the state by intentionally underpaying royalties owed to Alabama.

If the unpaid royalties were paid, the amount would represent 7 percent of the $1.9 billion that Alabama has in its oil and natural gas trust funds. On Nov. 7, voters approved spending some of the state's natural gas royalties for improvements to roads, bridges, state docks and state labs.

In 1997, the state asked Exxon for $50.5 million alleged underpayments and asked for an additional $81.6 million in 1999. According to the lawsuit, Exxon has paid $240 million in oil and gas royalties since it began producing natural gas from state tracts off the Alabama coast in 1993.