Justice Kissoon’s landmark ruling plunges ExxonMobil’s stock price by nearly 12 %

May 18, 2023 Court Stories, ExxonMobil, Features / Columnists, News, Oil & Gas

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…Int’l lawyers monitoring case for precedent in ongoing insurance matters

Kaieteur News – A comprehensive analysis published yesterday by British daily newspaper, The Guardian, noted that ExxonMobil Corporation’s stock price dropped by more than US$10 following the landmark ruling by Justice Sandil Kissoon ordering the oil giant to provide Guyana with an unlimited parent guarantee for oil spills. In the article authored by award winning journalist and podcaster, Amy Westervelt, she said the nearly 12 percent decline occurred in just a matter of two weeks.

Kaieteur News’ independent checks also showed that the stock price was US$115 two days before the May 3 judgment but then slipped to US$105 after the ruling was issued.

Westervelt’s report also quotes Chief Executive Officer (CEO) and president of the Center for International Environmental Law, Carroll Muffett on the significance of the case for the industry. He said lawyers from around the world fighting similar matters are looking to the case for inspiration. Muffett is quoted in the piece saying, “Lawyers from around the world who are fighting oil and gas, off the coasts of southern Africa, off the coast of Mozambique, and in other places in the Caribbean are going to be looking at this decision and, paying close attention to whether the financial guarantees being provided in other oil and gas exploration and development permits are at an equivalent level.”

The Guardian report also noted that Justice Kissoon’s ruling promoted two new shareholder resolutions that are to be heard and voted on at ExxonMobil’s annual shareholders’ meeting on May 31, 2023. The report states that one proposal from a shareholder group seeks to compel Exxon to conduct a study on the impacts of a worst-case scenario spill on Guyana and 12 other Caribbean territories. Another shareholder proposal also seeks to ascertain an actuarial assessment of the potential cumulative risk to Exxon from current environment-related litigation against the company and its affiliates, including the recent ruling, which is one of seven cases the company is facing here. (The full Guardian analysis by Westervelt can be accessed via this link: https://www.theguardian.com/world/2023/may/17/could-guyanas-exxon-ruling-scare-big-oil-off-risky-exploration.)

Separately, Westervelt shared with Kaieteur News that Steve Coll an American journalist, academic and award winning writer was interviewed about Exxon’s operations in Guyana. He alluded that Guyana is increasing in its importance to Exxon. Coll said, “A place like Guyana where they’re on the hook for 25 percent of their production, that’s actually leverage because they can’t afford to lose that much daily liquids production.” In essence, Guyana more than has the right and the increasing power/leverage to demand that its environment is properly protected from the dangers that come with deepwater drilling.

Kaieteur News previously reported that the landmark ruling by Justice Sandil Kissoon was issued on May 3, 2023 after it was first filed last year September by the legal team for Frederick Collins and Godfrey Whyte. They were successful in getting the court to declare that ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEPGL) was not in compliance with the insurance provisions of its Liza Phase One Permit, which requires an unlimited parent guarantee for oil spills in the Stabroek Block.

The EPA had argued in court that the country is poised to receive a US$2B parent guarantee from Exxon. But Justice Kissoon had said that even then, EEPGL would still be in breach of its permit obligations.

Justice Kissoon categorically stated that the Liza Phase One Permit carries a confluence of measures, specifically at Condition 14 which stipulates and imposes full, complete and unlimited liability upon the Permit Holder for any discharge of any contaminant into the environment and for all costs of clean up, restoration and any damages all of which constitute legitimate liabilities under the Permit. The Judge said the norm or standard in relation to activities of this nature has been and continues to be that the Permit Holder is exclusively and solely responsible for all such liabilities arising from its operations without limitation or exception.

Expounding further, Justice Kissoon noted that Condition 14 of the permit titled Financial Assurance and Liability for Pollution Damage provides at: 14:1 that: The Permit Holder is liable for all costs associated with clean up, restoration and compensation for any damages caused by an discharge or any contaminant including the cost of all investigations into pollution incidents or discharge of contaminants conducted at the instance of the Agency.

Justice Kissoon also ruled that, “Condition 14:01 does not contain any word or term of limitation upon liability, quantum of costs, quantum of damages nor restrictions on the circumstances of release or discharge nor on containment nor restriction on the sphere of adverse effects caused directly or indirectly.”

Justice Kissoon said the unlimited liability which is exclusively that of EEPGL, is by no means unusual in any sense. Considering all the submissions, Justice Kissoon ruled that, “It is simply not open to the Permit Holder to say it is engaged in a frolic of its own, aided and abetted by the EPA, to unilaterally, arbitrarily and unlawfully cap its unlimited liability and financial assurance.”

Justice Kissoon has given the EPA and EEPGL up to June 10 to comply with his order. The EPA also has a pending appeal on the judgment set for hearing and decision on May 29, 2023.

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• Amy Westervelt, analysis, ExxonMobil, journalist, Justice Sandil Kissoon ruled that Exxon’s affiliate

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