ExxonMobil’s U.S.-focused subsidiary XTO Energy Inc. has agreed to pay $16 million to resolve allegations that it knowingly underpaid royalties owed on natural gas produced from federal and Native American lands. 

The settlement with the U.S. Department of Justice (DOJ) resolves allegations that XTO improperly deducted costs that were “necessary to put the gas in marketable condition,” as well as deducting costs to transport carbon dioxide (CO2) and for failing to pay royalties on the CO2.

“Mineral royalties provide an important source of income for the United States, Native Americans and various states,” said principal Deputy Assistant Attorney General Brian M. Boynton, head of the DOJ’s Civil Division. “This settlement demonstrates that the department will hold...