Devon Energy, Royalties Underpayment, Wyoming 2024

Devon Energy Corporation, the Oklahoma-based oil and natural gas exploration and production company, has agreed to pay a hefty price for underpaying and underreporting royalties for natural gas from federal lands in Wyoming and New Mexico.

According to investigators, Devon took advantage of the system by improperly deducting payments to third-parties for gas transportation and processing, which included costs to place the gas in marketable condition. This led to the company knowingly underreporting and underpaying royalties to the Department of the Interior (DOI).

The United States leases federal lands for the production of natural gas in exchange for the payment of royalties on the value of the gas produced. Lessees must put the gas in marketable condition at no cost to the United States. Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division stated, “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. This settlement demonstrates that the government will hold accountable those who take improper advantage of public resources.”

Devon Energy Production Company LP and its affiliates, Devon Energy Corp. (Oklahoma), collectively agreed to pay $6.15 million to resolve the allegations. Acting U.S. Attorney Matthew T. Kirsch for the District of Colorado added, “We hold our public lands very dear in Colorado. We will not allow companies extracting natural resources from those lands to avoid paying what they rightfully owe.”

The resolution in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the United States Attorney’s Office for the District of Colorado, with the assistance of DOI’s Office of the Inspector General-Energy Investigations Unit, DOI’s Office of the Solicitor, and DOI’s Office of Natural Resources Revenue.

The claims resolved by the settlement are allegations only and there has been no determination of liability. This highlights the importance of thorough investigations and the commitment of the authorities to ensuring accountability in such cases.

Special Agent in Charge Ron Gonzales for the DOI Office of Inspector General’s Energy Investigations Unit added, “The Office of the Inspector General is committed to working with our partners at the Department of the Interior, Office of Natural Resources Revenue and the Office of the Solicitor to ensure that companies producing minerals from areas under Federal jurisdiction fulfill their legal and professional responsibilities.”

The case was investigated by Senior Trial Counsel Gregory Pearson and Assistant U.S. Attorney Amanda Rocque of the District of Colorado.

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