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Oil Companies Underpay Royalties on Government Leases

Dominion Oklahoma Texas Exploration and Production, Inc. (Dominion) and Marathon Oil have agreed to pay $2.2 and $4.6 million to the federal government to resolve allegations that the companies underpaid royalties on leases with the federal government and Native American Tribes.  Many oil companies drill for oil on lands owned by the federal government or Native American Tribes.  When they drill on this land, they operate under a lease with the government that requires the companies to pay royalties based on the amount of oil extracted.  According to the government, Dominion and Marathon Oil engaged in a systematic campaign to underpay these royalties.

The whistleblower in this case, Harold Wright (now deceased), has been an invaluable resource in these royalty underpayment cases.  His heirs will receive $1.82 million for Mr. Wright’s role in the achieving the settlement.  In addition to this case, his information has led to settlements against Burlington Resources ($105.3 million), Shell ($56 million), Chevron, Texaco, and Unocal ($145.5 million), and Mobil ($32.2 million).