Washington – A unit of ConocoPhillips has agreed to pay $97.5 million to settle a whistle-blower’s claims that it underpaid royalties owed for natural gas produced on federal and Indian lands over a 17-year period.
Burlington Resources Inc., which last year became a ConocoPhillips subsidiary, agreed to the settlement to resolve allegations under the False Claims Act that it “systematically underreported the value of natural gas that it produced from onshore federal and Indian leases … (and) paid less royalties than it owed to the United States and various Indian tribes,” according to the Justice Department.
Under a program overseen by the Department of the Interior’s Minerals Management Service, companies are required to report monthly the value of the natural gas produced from their federal and Indian leases and to pay a percentage of the reported value as royalties.
Burlington’s alleged violations occurred between March 1, 1988, and March 31, 2005.
ConocoPhillips spokesman Charlie Rowton said the company was pleased to resolve the issues and noted that under the settlement, the Justice Department will dismiss the False Claims Act case against Burlington Resources. The company put the value of the settlement, including interest, at $105 million.
The settlement arose from a lawsuit against several companies filed by a private whistleblower under the False Claims Act. The Justice Department previously settled with Shell Oil Co. for $56 million, with Dominion Exploration and Production Co. for $2 million, and is continuing to pursue claims against Exxon Mobil Corp.
Justice Department spokesman Charles Miller on Wednesday said it has not been determined if the whistle-blower would receive a portion of the settlements.
The investigation of and settlement with Burlington were jointly handled by the U.S. attorney for the Eastern District of Texas and the Department of Justice, with assistance from the Department of the Interior’s Office of Inspector General, the Minerals Management Service, and the New Mexico Taxation and Revenue Department Oil and Gas Bureau.
