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Anadarko, Kerr-McGee Agree to Pay $17M to Settle Whistle-Blower Case

Anadarko Petroleum Corp., subsidiary Kerr-McGee Corp. and their affiliates have agreed to pay the federal government more than $17 million to resolve claims that they violated the False Claims Act (FCA) by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases, the Department of Justice (DOJ) said Monday. This is the latest settlement in a long-running whistle-blower case.

The settlement claims that Anadarko and Kerr-McGee improperly deducted from royalty values the cost of boosting gas up to pipeline pressures and improperly reported processed gas as unprocessed gas to reduce royalty payments, as well as deals with a series of outstanding administrative claims, according to DOJ.

The settlement arises from a lawsuit -- U.S. ex rel. Wright v. Chevron USA, Inc. et al. -- filed by Harold Wright in Texas on behalf of the United States (see Daily GPI, April 5, 2000). The whistle-blower provisions of the FCA allow private citizens to file actions on behalf of the United States and to share in any recovery proceeds.

DOJ has intervened against several other defendants in the Wright lawsuit. Total settlements in the case to date exceed $249 million, DOJ said.

Shell Oil Co. and some of its affiliates agreed to pay the United States $2.2 million to resolve the FCA claims in May (see Daily GPI, May 12). In March Occidental Petroleum Corp. and affiliates Occidental Oil and Gas Corp. and OXY USA Inc. agreed to pay the federal government $2.05 million to resolve claims that they knowingly underpaid royalties owed on gas produced from federal leases, as alleged in the Wright lawsuit (See Daily GPI, March 24).

In April 2010 units of ExxonMobil were ordered to pay the United States $32.2 million to resolve claims that they violated the FCA (see Daily GPI, April 6, 2010).

Mobil Natural Gas Inc., Mobil Exploration & Producing U.S. Inc. and their affiliates, which were merged into and became subsidiaries of ExxonMobil in November 1999, were alleged to have systematically underreported the value of natural gas taken from the leases from March 1, 1988 to Nov. 30, 1999, and consequently paid less royalties than owed to the United States and various Indian tribes.

And in late 2009 Chevron Corp. agreed to pay nearly $45.6 million to resolve claims that it and predecessor companies (Texaco, Unocal Inc. and their affiliates) knowingly underpaid royalties owed on natural gas produced from federal and Indian leases (see Daily GPI, Dec. 28, 2009).

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