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Utah Producer Fined $2.2M for Maintaining False Royalty Data

The Interior Department's Office of Natural Resources Revenue (ONRR) said it has assessed civil penalties on a Utah produce for "knowing or willful" maintenance of false, inaccurate or misleading royalty information on ONRR's financial system.

ONRR levied one civil penalty for $1.3 million on Bountiful, UT-based Quinex Energy Corp. for maintaining the false royalty information on allotted Indian oil and natural gas leases in Utah, and a second civil penalty of $928,800 for the same violations covering Northern Ute Tribal leases. "I would like to tell you what I think [of Interior's allegations], but I can't" for legal reasons, said Quinex President John Wells.

"We think it's totally bogus," he told NGI.

The civil penalties stem from various audit and compliance notices issued in 2011 and 2012, which required Quinex to correct allegedly erroneous gas prices reflected in its royalty reports. Quinex has since paid the required royalties, but it has failed to correct the reporting errors. This constitutes "knowing or willful" maintenance of false, incorrect or misleading data in ONRR's financial system.

The civil penalties will continue to accrue until Quinex corrects the inaccurate information, according to ONRR. Quinex may request an administrative hearing on the civil penalties.

 "Accurate reporting is indispensable to proper royalty collection and is one of the first lines of defense in ensuring that ONRR collects every dollar due to the American taxpayer," said Paul A. Mussenden, Interior's Deputy Assistant Secretary for Natural Resources Revenue Management.

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