Exxon (XOM) to Battle US Interior Department Following Large Gulf Discovery
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A battle between the U.S. and Exxon Mobil (NYSE: XOM) over an oil discovery in the Gulf of Mexico now appears to be just getting kicked off. With the end result likely reaching billions in dollars for either side, who will win the lawsuit?
Exxon’s discovery is estimated to be valued around one billion barrels of recoverable oil.
The Interior Department said Exxon's leases have expired; the company has yet to meet the requirements for an extension. As a result, Exxon is suing the department in effort to retain the leases. The Julia field is broken into five different areas and three of the five are under dispute, the two other areas leases do not expire until 2013.
Failing to follow federal rules may result in Exxon watching tens of billions of dollars fall into others hands.
The Interior Department is trying to push around the nation’s largest oil company, effectively making it look Exxon has increased standards after receiving public scrutiny following BP’s (NYSE: BP) oil spill in the Gulf.
The WSJ suggested if the Interior Department allows for Exxon to begin drilling, this could directly result in the government receiving roughly $10.95 billion in royalties.
Exxon said it takes awhile to develop oil fields safely in the Gulf as the oil is so deep from the water’s surface. "This is very deep water, very complex structures and difficult-to-produce oil," said Exxon's Patrick McGinn.
Regardless of the eventual decision, this dispute will likely cause a lot of controversy on the political front and on the industry.
Exxon’s discovery is estimated to be valued around one billion barrels of recoverable oil.
The Interior Department said Exxon's leases have expired; the company has yet to meet the requirements for an extension. As a result, Exxon is suing the department in effort to retain the leases. The Julia field is broken into five different areas and three of the five are under dispute, the two other areas leases do not expire until 2013.
Failing to follow federal rules may result in Exxon watching tens of billions of dollars fall into others hands.
The Interior Department is trying to push around the nation’s largest oil company, effectively making it look Exxon has increased standards after receiving public scrutiny following BP’s (NYSE: BP) oil spill in the Gulf.
The WSJ suggested if the Interior Department allows for Exxon to begin drilling, this could directly result in the government receiving roughly $10.95 billion in royalties.
Exxon said it takes awhile to develop oil fields safely in the Gulf as the oil is so deep from the water’s surface. "This is very deep water, very complex structures and difficult-to-produce oil," said Exxon's Patrick McGinn.
Regardless of the eventual decision, this dispute will likely cause a lot of controversy on the political front and on the industry.
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