Energy firms Dominion, Marathon Oil to pay $6.9 million settlement for underpaid gas royalties

Dominion, Marathon Oil pay $6.9 million settlement

HOUSTON — Marathon Oil Co. and Dominion Oklahoma Texas Exploration and Production Inc. will pay $6.9 million to resolve claims the two Houston-based energy companies separately underpaid natural gas royalties to the government and Native Americans, the Department of Justice said Friday.

Most of the $2.2 million paid by Dominion Oklahoma Texas and $4.7 million by Marathon will be distributed to federal, state and American Indian accounts affected by the underpayments, the department said in an announcement from Washington. More than $1.8 million will go to heirs of a whistleblower who filed a lawsuit more than a decade ago in Beaumont.

Companies are required to report to the Interior Department each month the value of natural gas produced from their federal and Indian leases. A percentage of that value is paid as royalties.

The government contended the companies made improper deductions from royalty values and violated the False Claims Act by underpaying the royalties.

Assistant Attorney General Tony West said mineral royalties provide an important source of income for Native Americans, the federal government and several states.

The man who filed a lawsuit over the issue in 1998, Harrold Wright, has died, and his heirs will receive payment under the whistleblower provisions of the False Claims Act. The law allows private citizens to file actions on behalf of the United States and share in any recovery.

Wright’s suit alleged a number of energy companies systematically underpaid royalties. Settlements with other companies have already been reached. Burlington Resources agreed to pay $105.3 million. Shell paid $56 million. Chevron, Texaco and Unocal agreed to $45.5 million, and Exxon Mobil settled for $32.3 million.

Messages left with the energy companies and the law firm representing the Wright estate were not immediately returned.