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Devon Energy settles underpaid royalty allegations for $6.15 million
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Devon Energy settles underpaid royalty allegations for $6.15 million

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Natural Gas Pipeline

Sections of pipe are stretched across the landscape in May 2012 for a new natural gas pipeline north of Douglas in Converse County.

Devon Energy Corporation and two of its affiliates will pay $6.15 million to the U.S. government to settle charges that it underpaid natural gas royalties from drilling on federal lands.

“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.

The disputed gas production occurred in Wyoming’s Powder River Basin and New Mexico’s San Juan Basin.

Natural gas operators leasing federal lands are also legally obligated to bear all costs of putting gas in marketable condition — such as processing and transportation — and transfer none of the expenses to the landowner.

State and federal investigators allege that Devon Energy deducted some of those costs from its royalty payments, resulting in the corporation “inaccurately and falsely reporting, underpaying royalties, and overstating transportation and processing allowances,” the settlement reads.

Devon Energy has denied those allegations. Under the terms of the settlement, the company will not admit liability and investigators will not rescind any of their claims. Still, the plaintiffs view the agreement as a victory.

“This settlement demonstrates that the government will hold accountable those who take improper advantage of public resources,” Boynton said.

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