Department of Justice Seal




(202) 514-2007


TDD (202) 514-1888



WASHINGTON, D.C. - Devon Energy Production Company (formerly Pennzoil Company) has agreed to pay $11.9 million to resolve claims that Pennzoil underpaid royalties due for oil produced on Federal and Indian leases between January 1, 1988 and December 31, 1998, the Justice Department announced today. Sunoco, Inc. also agreed to pay $200,000 to resolve the same allegations that it underpaid royalties due the United States and Indian tribes.

"These settlements are an example of the Justice Department's determination to ensure that the government is compensated for underpayment of oil royalties," said David W. Ogden, Acting Assistant Attorney General for the Civil Division.

Federal leases are administered by the Minerals Management Service of the United States Department of the Interior. Each month, oil companies are required to report the amount of oil produced and the value of the oil produced on Federal and Indian leases. The companies pay royalties based upon the value of the oil they report.

The settlements resolve allegations that Pennzoil and Sunoco systematically underreported the value of oil they produced on Federal and Indian leases and, consequently, that they paid less royalties than they owed.

"The settlements brings us one step closer to restoring to the taxpayers and Indian tribes of the United States the money due for production of oil on public lands," said Mike Bradford, U.S. Attorney for the Eastern District of Texas. "We commend the companies for settling this matter in a way that avoids further litigation, and we will continue to press forward with the prosecution of this False Claims Act lawsuit against other companies that have underpaid their royalty obligations."

The settlement agreement with Pennzoil was signed by representatives of several Indian tribes, as well as the federal government and Pennzoil. Two relators who had filed a complaint in the United States District Court in Lufkin, Texas against Pennzoil and Sunoco on behalf of the United States under the underline">qui underline">tam provisions of the False Claims Act will share in the proceeds of the settlements.

The Department has also reached settlement agreements with several other oil companies -- Mobil Oil paid $45 million, Oxy USA, Inc. paid $7.3 million, Chevron paid $95 million, BP Amoco paid $32 million and Conoco paid $26 million.

The investigations and settlements were jointly handled by the Office of the United States Attorney for the Eastern District of Texas and the Civil Division of the Department of Justice, with the assistance of the Department of the Interior's Office of Inspector General and the Minerals Management Service.