Oil companies ExxonMobil, Empire Petroleum, and their subsidiaries engaged in accounting fraud that could cost the state nearly $200 million, a lawsuit filed in New Mexico District Court alleges. If successful, plaintiffs say the case could change how old oil and gas assets are sold, leading to fewer orphan wells in the future.
The case stems from the sale of several hundred old wells from ExxonMobil subsidiary XTO Energy to Empire Petroleum subsidiary Empire New Mexico in 2021. The suit alleges the fraud occurred when the two companies “massively” undervalued the debt obligations inherent in the sale — namely, the eventual well cleanup costs — violating New Mexico’s Fraud Against Taxpayers Act.
The plaintiffs claim the undervaluation led Empire Petroleum to take on wells it would never realistically have the money to plug, immediately making the company insolvent and at risk of bankruptcy.
“Orphan” wells have no known or solvent owner. In New Mexico, the state is the final stop for these wells on state and private l... Read more
