SHELL SETTLES WITH ALABAMA
Mar 22, 2002
Platts Oilgram News
Vol. 80, No. 56
Beth Evans
Shell Oil said Mar 21 it reached an "amicable" $33.5-mil settlement
with the state of Alabama over royalties on natural gas produced in Mobile Bay.
Shell said in a statement it will pay the state $27.12-mil. The company,
denying any wrongdoing, will also pay some $6.38-mil in fees and costs
to Alabama's outside counsel.
Alabama had alleged $25.4-mil in actual damages through the end of 1999.
The settlement covered those claims as well as the additional two-plus
years through March 2002.
"Shell and the state have been working for a number of years to resolve
their differences regarding interpretation of certain mineral lease provisions.
Even before the settlement, Shell already had paid the state over $170-mil
in royalties since 1991," Shell said.
The win against Shell is the latest in a string of oil company royalty
wranglings for lawyers at Cunningham, Bounds, Yance, Crowder & Brown.
The firm, representing Alabama, still has two royalty lawsuits pending
against pre-merger Mobil and pre-merger Amoco, according to partner Richard
Dorman. Mobil damages are estimated at $21-mil. There was no estimate
for Amoco damages. The suits could be settled over the next year, said Dorman.
The firm represented Alabama two years ago when a jury found Exxon owed
the state a whopping $87.7-mil in compensatory damages and $3.42-bil in
punitive damages (ON 12/20/00). The case is on appeal before the Alabama
Supreme Court.
The next case tried, against Hunt Oil, resulted in a December 2001 jury
verdict in favor of the state for $3.4-mil in compensatory damages and
$20-mil in punitive damages.