A $194M Cover-Up? New Mexico Says Yes

New Mexico is suing ExxonMobil and Empire Petroleum over $194M in alleged hidden well cleanup costs, using a statute never tried this way before

28 May 2026

New Mexico has filed suit against ExxonMobil and Empire Petroleum, accusing the two companies of severely understating the cost of plugging and cleaning up 670 aging oil wells transferred between them in 2021. The case, unsealed in April 2026, alleges the transaction left Empire immediately unable to meet its financial obligations.

State plaintiffs contend the companies valued cleanup costs at roughly $9,100 per well. New Mexico's own average stands at $214,000, a gap the suit places at $194m in total.

Unusually, the case does not rest on oil and gas regulation. Attorneys are instead invoking the New Mexico Fraud Against Taxpayers Act, a statute more commonly applied to healthcare billing and government contracting abuses. The approach, which lawyers describe as without precedent in US courts, could compel stricter scrutiny whenever well portfolios change hands at valuations that obscure true remediation obligations.

Backdrop matters here. Federal infrastructure funding of $4.7bn targets a backlog of idle, unplugged wells across the country, yet research from Resources for the Future estimates total plugging costs could exceed that figure by 30 to 80 per cent. Before the contested wells entered the picture, New Mexico had already absorbed more than $200m in state-assumed cleanup liability by 2022.

ExxonMobil declined to comment. Empire Petroleum did not respond to press inquiries. Both companies may argue that estimating long-term decommissioning costs involves genuine and industry-standard uncertainty. Even so, the original valuation methodology will now face formal legal examination, and any ruling favouring the plaintiffs could impose tighter due-diligence requirements on the broader market for aging oil and gas assets.