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Federal agency levies $428,400 fine against Chesapeake in royalty reporting case

Chesapeake failed to correct inaccurate royalty reports for a tribal lease in Custer County for several months in 2005, the Interior Department’s Office of Natural Resources Revenue said Wednesday.
by Paul Monies Modified: February 27, 2014 at 4:00 pm •  Published: February 26, 2014

Chesapeake Energy Corp. faces federal civil penalties of $428,400 for underreporting royalties on a tribal lease in Oklahoma, the Office of Natural Resources Revenue said Wednesday.

The office, part of the Interior Department, said Chesapeake had a “knowing or willful submission” of inaccurate royalty reports for several months in 2005. The leases were from the Cheyenne and Arapaho Tribes in Custer County.

Auditors found the inaccurate reports and told the company about them, but Chesapeake did not make the proper corrections, the office said.

“It is imperative that companies file accurate and timely reports required by existing law so ONRR can ensure American Indian and taxpayer assets are protected,” Director Greg Gould said in a statement. “It is simply unacceptable that a company continues to file inaccurate reports after an audit order instructed the company to make the necessary corrections.”

Chesapeake may request a hearing on the penalty. The company declined to comment Wednesday.

Last year, the federal office fined Chesapeake $765,000 for incorrectly reporting oil and natural gas royalties on federal land from May 2011 to July 2012. Chesapeake paid the penalty and that case is now closed.

The Denver-based Office of Natural Resources Revenue manages and disburses revenues associated with federal offshore and federal and American Indian onshore mineral leases.

by Paul Monies
Energy Reporter
Paul Monies is an energy reporter for The Oklahoman. He has worked at newspapers in Texas and Missouri and most recently was a data journalist for USA Today in the Washington D.C. area. Monies also spent nine years as a business reporter and...
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