ConocoPhillips Settles Royalties Lawsuit

Press enter to search
Close search
Open Menu

ConocoPhillips Settles Royalties Lawsuit

HOUSTON -- ConocoPhillips will pay the government $97.5 million to resolve a lawsuit alleging that Burlington Resources, a company it acquired last year, failed to pay enough royalties for natural gas produced on federal and American Indian lands, the Houston Chronicle reported.

The third-largest oil major in the company said Wednesday that it has agreed to pay $7.5 million in interest. In exchange, the Justice Department will dismiss a civil claim that Burlington "systematically" underreported values of natural gas produced from onshore federal and Indian leases for 17 years, starting in 1988. Producers must report the value to pay a percentage in royalties.

The lawsuit alleged Burlington underestimated the value, therefore paying less in royalties than it owed the government and three Indian tribes.

The settlement resolves "longstanding administrative disputes over the interpretation of complex and ambiguous federal regulations" regarding royalties, ConocoPhillips said in a statement to the Houston Chronicle. "The $105 million settlement consisted of additional royalty payments on natural gas production from 1998 until 2005 plus interest." The company noted that no fines or penalties were imposed.

The False Claims Act, the basis for the lawsuit, allows whistle-blowers to sue companies for fraud against the federal government. Justice Department spokesman Charles Miller told the Associated Press it has not been determined whether the whistle-blower will receive a portion of the settlements, the Houston Chronicle reported.

The Justice Department said it is still pursuing royalty claims against ExxonMobil Corp. Company spokeswoman Margaret Ross declined to comment.

In the Burlington suit, the government previously settled with Shell Oil for $56 million and Dominion Exploration and Production Co. for $2 million. The case was originally filed in 1996 in federal court in Lufkin, Texas.

Settlements involving the same issues in the late 1990s and early 2000s included $95 million from Chevron Corp., $32 million from BP Amoco and $7.3 million from Oxy USA.