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.
