Devon Energy Companies Agree to Pay $6.15 Million to Settle False Claims Act Allegations for Underpaying Royalties on Gas from Federal Lands
Devon Energy Corporation, an Oklahoma-based oil and natural gas exploration and production company, and its affiliates, Devon Energy Corp. (Oklahoma) and Devon Energy Production Company LP (collectively, “Devon”), have agreed to pay $6.15 million to resolve allegations that it violated the False Claims Act by underpaying and underreporting royalties for natural gas from federal lands in Wyoming and New Mexico.
The United States leases federal lands for the production of natural gas in exchange for the payment of royalties on the value of the gas produced. Lessees must put the gas in marketable condition at no cost to the United States. The settlement resolves allegations that, in calculating royalties, Devon improperly deducted payments to third-parties for gas transportation and processing that included costs to place the gas in marketable condition, and thereby knowingly underreported and underpaid royalties to the Department of the Interior (DOI).
“The United States allows companies to remove gas from federal lands, which belong to all of us, in exchange for the payment of appropriate royalties,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “This settlement demonstrates that the government will hold accountable those who take improper advantage of public resources.”
“We hold our public lands very dear in Colorado,” said Acting U.S. Attorney Matthew T. Kirsch for the District of Colorado. “We will not allow companies extracting natural resources from those lands to avoid paying what they rightfully owe.”
“The Office of the Inspector General is committed to working with our partners at the Department of Justice, Office of Natural Resources Revenue and the Office of the Solicitor to ensure that companies producing minerals from areas under Federal jurisdiction fulfill their legal and professional responsibilities,” said Special Agent in Charge Ron Gonzales for the DOI Office of Inspector General’s Energy Investigations Unit.
The resolution in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the United States Attorney’s Office for the District of Colorado, with the assistance of DOI’s Office of the Inspector General-Energy Investigations Unit, DOI’s Office of the Solicitor, and DOI’s Office of Natural Resources Revenue.
The matter was investigated by Senior Trial Counsel Gregory Pearson and Assistant U.S. Attorney Amanda Rocque of the District of Colorado.
The claims resolved by the settlement are allegations only and there has been no determination of liability.