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Marathon Accused of Failing to Pay Back Royalty Interest

Marathon Oil Corp. said Tuesday it has been served with a lawsuit alleging it violated the False Claims Act by failing to pay the federal government interest related to adjustments in royalty payments.

In its quarterly 10-Q report filed with the Securities and Exchange Commission (SEC), the Houston-based producer said it was served in October with the qui tam lawsuit alleging that Marathon violated the False Claims Act by not paying the government past due interest resulting from royalty adjustments for crude oil, natural gas and other hydrocarbon production.

The lawsuit, which was filed in the Western District of Oklahoma, asserts that Marathon Oil and other defendants are liable for past due interest, penalties, punitive damages and attorney fees, the company said.

The Department of Justice has filed a notice with the court that it will not intervene in the case, according to Marathon Oil. The company said it intends to "vigorously defend" itself.

Under a qui tam complaint, a person or persons can bring a lawsuit on behalf of the government against anyone who is suspected of using government funds in a fraudulent way. The whistleblowers are permitted to receive a portion of any funds recovered in the lawsuit.

As was previously reported, Marathon Oil has been involved in two other qui tam cases, which alleged that federal and Indian lessees violated the False Claims Act with respect to reporting and payment of royalties on natural gas and natural gas liquids. One of the cases (Jack J. Grynberg vs. Alaska Pipeline Co. et al) was dismissed as to Marathon on Oct. 20 on jurisdictional grounds, the company said.

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