Oil Companies Accused of Massive Accounting Fraud in New Mexico

Suit claims ExxonMobil and others underreported debts by $194 million, calling it 'a playbook' for how companies dump old wells and expenses on states.

Apr. 6, 2026 at 8:38pm

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A photorealistic studio still life featuring a stack of financial documents, a calculator, and a leaky oil drum, symbolizing the hidden environmental and financial costs of the oil industry's accounting practices.An investigation into alleged accounting fraud exposes the hidden costs of the oil industry's asset transfers, potentially leaving taxpayers responsible for millions in cleanup.Taos Today

Oil companies ExxonMobil, Empire Petroleum and their subsidiaries engaged in accounting fraud that could cost the state nearly $200 million, a lawsuit filed in New Mexico District Court alleges. If successful, plaintiffs say the case could change how old oil and gas assets are sold, leading to fewer orphan wells in the future.

Why it matters

Orphan wells have no known or solvent owner, making the state responsible for the expensive plugging and remediation costs. This case highlights how oil companies may be undervaluing the true cleanup costs when transferring old, low-producing wells, potentially leaving taxpayers on the hook.

The details

The case stems from the sale of several hundred old wells from ExxonMobil subsidiary XTO Energy to Empire Petroleum subsidiary Empire New Mexico in 2021. The suit alleges the fraud occurred when the two companies 'massively' undervalued the debt obligations inherent in the sale – namely, the eventual well cleanup costs – violating New Mexico's Fraud Against Taxpayers Act. The plaintiffs claim the undervaluation led Empire Petroleum to take on wells it would never realistically have the money to plug, immediately making the company insolvent and at risk of bankruptcy.

  • In 2021, XTO Energy sold several hundred old wells to Empire New Mexico.
  • In 2022, New Mexico's Legislative Finance Committee said the state is already liable for more than $200 million in cleanup costs for orphaned wells.
  • The lawsuit was filed in August 2025 and was under seal until last week as the New Mexico Attorney General's office reviewed it.

The players

ExxonMobil

An American multinational oil and gas corporation and one of the world's largest publicly traded companies.

Empire Petroleum

A publicly traded oil and gas company that acquired several hundred old wells from ExxonMobil subsidiary XTO Energy in 2021.

XTO Energy

An ExxonMobil subsidiary that was one of the state's top-five oil and gas producers in 2025.

Theron Horton

A forensic data analyst from Taos, New Mexico, and one of the plaintiffs in the lawsuit.

Greg Rogers

A corporate and environmental lawyer, former CPA, and one of the plaintiffs in the lawsuit.

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What they’re saying

“It is critical that each of us do everything we can to stop the tsunami of corruption that threatens the very existence of our country.”

— Theron Horton

“If I lack the courage to call this out no matter the odds, no one else will, and taxpayers, citizens and landowners will pay the price.”

— Greg Rogers, Fellow and Adviser, Master of Accounting program at the Judge Business School, University of Cambridge

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.