Chesapeake Energy was fined $2.1 million on Monday by the U.S. Department of Interior for under reporting gas production on American Indian leases.
The department’s Office of Natural Resources Revenue (ONRR) assessed a $2,118,900 civil penalty against Chesapeake for failure to comply with an October 2011 order that found “repeated, systemic errors” in the firm’s monthly reporting of gas production from Indian leases.
The order required Chesapeake to review the amounts it reported for more than 100 Indian leases and correct under reported and misreported volumes.
In May 2012, Chesapeake said it had submitted all the corrections required by the order but follow-up testing conducted by the ONRR found additional under reported volumes.
Although Chesapeake corrected those errors in 2013 further sampling conducted by the ONRR still found uncorrected volume shortages that the company then corrected in May 2014.
The ONRR said that while Chesapeake did eventually comply with the order to amend the reports it “continued to maintain inaccurate information on ONRR data systems for an extended period.”
The company was hit with the $2.1 million civil penalty for knowing or willful maintenance of the inaccurate information.
“Correct royalty reports, especially on American Indian leases, are essential for ONRR to ensure all royalties are paid, to provide reliable data used by ONRR’s audit and compliance teams, and to provide accurate data to the American public,” Interior Deparmtnet Assistant Secretary for Natural Resources Revenue Management Paul A. Mussenden said.
The fine is just the latest legal dispute Chesapeake has settled this year.
In January, the company agreed to pay $119 million to resolve a 2004 payment dispute with a group of Oklahoma natural gas royalty owners.
That settlement was followed by a $25 million payment in April to settle antitrust, racketeering and fraud charges filed by Michigan’s attorney general in 2014 and a confidential settlement with Texas investors in September tied to a royalty payment dispute.
The company was also ordered by a U.S. federal court in July to pay $379.7 million to bond investors after the firm was found to have waited too long to announce a plan to redeem bonds.