Conoco Phillips' Subsidiary to Pay United States $97.5 Million for Fraudulent Underpayment of Natural Gas Royalties

    WASHINGTON, Aug. 15 /PRNewswire-USNewswire/ -- Burlington Resources
 Inc. has agreed to pay the United States $97.5 million to resolve claims
 that it underpaid royalties owed on natural gas produced from federal and
 Indian leases, the Justice Department announced today. Last year,
 Burlington became a wholly owned subsidiary of Conoco Phillips, the third
 largest integrated energy company in the United States.
 
     The settlement resolves allegations under the False Claims Act that
 Burlington systematically under-reported the value of natural gas that it
 produced from onshore federal and Indian leases from March 1, 1988, to
 March 31, 2005, and consequently, paid less royalties than it owed to the
 United States and various Indian tribes.
 
     The Minerals Management Service (MMS) of the U.S. Department of the
 Interior is responsible for overseeing the collection of royalties on
 federal and Indian leases. Each month, companies are required to report to
 MMS the value of the natural gas produced from their federal and Indian
 leases and to pay a percentage of the reported value as royalties. The
 United States alleged that Burlington used transactions with affiliated
 entities to claim excessive deductions for the cost of transporting and
 treating its gas, and to otherwise understate the value it reported each
 month for its natural gas production.
 
     "The Department of Justice is committed to ensuring that those who
 remove valuable assets from public or Indian lands pay a fair price for
 those assets," said Peter D. Keisler, Assistant Attorney General for the
 Civil Division. "We will continue to pursue claims against other companies
 that seek to evade their royalty payment obligations."
 
     The settlement with Burlington arises from a lawsuit filed by a private
 whistleblower under the False Claims Act, which alleges that a number of
 companies systematically underpaid royalties due for their federal and
 Indian natural gas production. The Justice Department partially intervened
 against several defendants in the lawsuit, and previously settled with
 Shell Oil Co. for $56 million and Dominion Exploration and Production Co.
 for $2 million. The Department is continuing to pursue claims against
 Exxon-Mobil Corp.
 
     The investigation of and settlement with Burlington were jointly
 handled by the U.S. Attorney for the Eastern District of Texas and the
 Civil Division of the Department of Justice, with the assistance of 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.
 
 
 
 
 

SOURCE U.S. Department of Justice