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Devon Energy Settles for $3.5 Million

DALLAS (CN) - Devon Energy, an oil and gas company, will pay $3.5 million to settle federal claims that a subsidiary knowingly underpaid royalties for natural gas from federal and Native America lands, the Justice Department said.

Oklahoma City-based Devon acquired its subsidiary PennzEnergy in May 1999. Before the merger, PennzEnergy obtained natural gas from federal leases offshore in the Gulf of Mexico and onshore near the Gulf.

Prosecutors said PennzEnergy improperly deducted from royalties costs associated with boosting gas up to pipeline pressures and failed to report and pay royalties on gas used to fuel boosting compressors.

Devon, one of the largest independent oil and gas producers in the country, was one of several defendants sued under the False Claims Act by the late Harrold Wright, in Texarkana Federal Court. The federal government intervened to complete the settlement.

Wright's heirs will receive $908,000 plus interest as their share of this settlement.

Two weeks ago, similar claims against French oil and gas giant Total/Fina were settledfor $15 million. Prosecutors say total settlements under Wright's lawsuit so far exceed $300 million.

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