A whistle-blower lawsuit filed in Santa Fe accuses ExxonMobil, Empire Petroleum of Tulsa and their subsidiaries of nearly $200 million in fraud over the 2021 sale or several hundred old wells.
The sale involved nearly 700 oil, gas and injector wells covering 40,000 net acres of Permian Basin leasehold. In announcing the acquisition at the time, Empire Petroleum said the properties were characterized by high working and net revenue interests, producing nearly 1,100 BOEPD with 67% being oil.
The suit was filed by what are known as Qui Tam plaintiffs identified as Gregory Rogers and Theron Horton. They contend the alleged fraud happened when XTO Energy and Empire Petroleum “massively” undervalued the debt obligations in the sale, namely the eventual well cleanup costs and in doing so, violated New Mexico’s fraud Against Taxpayers Act.
The lawsuit claimed the undervaluation led Empire Petroleum to take on wells it would never realistically have the money to plug.
As contended in the suit, in its 2022 year-end filing with the Securities and Exchange Commission, Empire Petroleum reported that the sale came with a $6.1 million asset retirement obligation. That works out to $9,100 per well in cleanup and remediation costs for the 670 wells in the sale. But in its 2023 Annual Report, the New Mexico Oil Conservation Division placed its state-wide average plugging and remediation costs at around $214,000 per well.
Investigative journalism website, Capital and Main, reported Empire Petroleum has lost money on the investment in New Mexico and recorded total net losses of $100 million over the past three years.
“According to production figures filed with New Mexico’s Oil Conservation Division, Empire New Mexico reported selling 17% less oil and 18% less natural gas to market in 2025 than in 2022.
Many of the company’s oil and gas wells produce little, if anything at all. While 375 Empire New Mexico oil and gas wells are listed as “active” on the state’s Oil Conservation Division website, only 302 were recorded pulling up anything in January 2026, the last month for which full production numbers are available. Sidney Hill, public information officer with the New Mexico Energy, Minerals and Natural Resources Department, said that 306 of the company’s wells are “stripper wells” producing less than the equivalent of 10 barrels of oil a day over the course of a year. He said about 28,000 New Mexico wells fit that description last year. Such low production indicates the wells are nearing the end of their economic lives.”
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