Lawyers for Exxon have described the decision as defying common sense and argued that the company had not engaged in fraud, that no evidence of fraud was established at trial, and fraud should never have been considered by the jury.

However, the trial was Exxon's second unsuccessful attempt to convince a jury that it hadn't underpaid royalties. In December 2000, a jury found the state had suffered $87.7 million in actual damages and awarded $3.42 billion in punitive damages. But the Alabama Supreme Court ordered a new trial after concluding the jury shouldn't have seen an internal Exxon memo that discussed its attorneys' views of the impending trial.

After deliberating a day and a half, the Alabama jury concluded Exxon had cheated Alabama out of $63.6 million in natural gas royalties and then imposed the $11.8 billion in punitive damages on top of the actual damages.

However the decision is not likely to survive after appeals because of a recent U.S. Supreme Court ruling that limits punitive awards to single-digit multipliers, or no more than nine times the actual damages established. The Alabama jury's decision is more than 180 times the $63,500,000 compensatory damages.

The state had argued Exxon improperly deducted costs from its royalty tab although the company maintained the state was fully aware of its methods for calculating the royalties owed.

Exxon Mobil claims that since 1993 it has paid more than $1 billion in royalty and lease payments to the State, and the amount in dispute by comparison represents less than 5% of that amount.

Exxon Mobil's total capital investment in Alabama currently exceeds $US3 billion and the company employs more than 200 people and thousands of contractors.