Kerr-McGee to pay $23m in royalties case

Federal ruling: Kerr-McGee

A US federal judge has ordered Kerr-McGee Oil & Gas to pay almost $23 million in penalties for making false royalty claims - with $5.7 million of that to go to the auditor who uncovered the problem.

The ruling comes almost seven years after former Minerals Management Service (MMS) auditor Bobby Maxwell discovered Kerr-McGee had underpaid federal royalties on 57 leases.

Kerr-McGee is now owned by Anadarko Petroleum.

Kerr-McGee was ordered to pay treble damages - triple the $7.5 million liability decided upon by a jury in 2007 - because of the false royalty claims it submitted to the federal government.

Federal judge Marcia Krieger yesterday ruled that Maxwell was entitled to 25% of the judgment, or about $5.7 million, under the federal whistle-blower programme for uncovering fraud and abuse.

A jury found that Kerr-McGee was selling its oil to Texon Corporation for below-market prices from 1999 to 2002 as part of an arrangement with Texon to provide marketing services and other incentives.

Kerr-McGee could still appeal the ruling.


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