By Denny Jacob
The U.S. Department of Justice said Hilcorp San Juan agreed to pay $34.6 million to resolve allegations that it knowingly underpaid royalties owed on oil and natural gas produced from federal lands.
Hilcorp said it cooperated fully with the investigation and was happy to have the matter resolved.
“There was no allegation of an intent to mislead or underpay royalties,” the company said in a statement. “The agreement ensures that all mineral interest owner involved received the amounts due to them, as is Hilcorp’s objective.”
The DOJ said the oil and gas company’s agreement resolves allegations that Hilcorp knowingly made payments to the federal government based on estimated volumes and prices without indicating that the payments were based on estimates and without subsequently making payments in the following month based on actual volumes and values from August 2017 through December 2018.
Congress allows federal lands to be leased for gas and oil production in exchange for royalty payments on the value of the oil and gas produced. Although lessees may make estimated royalty payments the month following production, they are required to pay actual royalties at the end of the month following the month in which the estimated payment is made.
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