Hilcorp San Juan has agreed to pay a sum of $34.6 million as part of a settlement with the Department of Justice. The settlement resolves allegations that the company knowingly underpaid royalties owed on oil and natural gas produced from federal lands.
Cooperating fully with the investigation, Hilcorp expressed its satisfaction in reaching an agreement to resolve the matter. The company emphasized that there was no intent to mislead or underpay royalties, stating, “The agreement ensures that all mineral interest owners involved received the amounts due to them, as is Hilcorp’s objective.”
The Department of Justice’s allegations centered around Hilcorp’s payment practices. Specifically, the company was accused of making payments to the federal government based on estimated volumes and prices, without clarifying that these were estimates. Additionally, Hilcorp was found to have failed to make subsequent payments based on actual volumes and values from August 2017 to December 2018.
Under congressional provisions, federal lands can be leased for gas and oil production. In return, lessees are obligated to make royalty payments based on the value of the oil and gas produced. While estimated royalty payments are allowed within the month following production, the lessees are required to pay the actual royalties by the end of the subsequent month.
In conclusion, Hilcorp San Juan’s agreement with the Department of Justice marks the resolution of the allegations, ensuring that the rightful amount reaches all mineral interest owners involved.
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