Devon Energy to pay $6.15 million to settle U.S. charges over natural gas royalties

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Devon Energy Corporation (NYSE: DVN) and its affiliates agreed to pay $6.15 million to settle the allegations of the United States government that it violated the False Claims Act (FCA) in connection with its natural gas royalty payments.

The U.S. government leases federal lands to Devon Energy. The dispute between the federal government and the Oklahoma-based oil and natural gas exploration and production company involves royalties for natural gas extracted from federal lands in New Mexico and Wyoming.

U.S. allegations against Devon Energy

The federal government alleged that Devon Energy and its affiliates underpaid and underreported its royalties for natural gas extracted from federal lands in both states  particularly at the San Juan Basin and at the Powder River Basin Conventional.

Devon Energy allegedly improperly deducted payments to third parties for their gas transportation and processing allowances to put the natural gas in marketable condition when calculating royalties.

Its alleged scheme resulted in the underpayment of natural gas royalties to the U.S.  Department of the Interior (DOI), Office of Natural Resources Revenue (ONRR).