Kerr-McGee to Settle Oil Royalty Charges

The Justice Department said that Kerr-McGee Corp. agreed to pay $13 million to settle charges that the company underpaid royalties on crude oil drilled from federal and Indian leases. The settlement, which covers underpayments in 1988, brings to an end allegations brought by two whistle-blowers that Kerr-McGee, along with other oil companies, tried to shortchange the government of royalty fees. The government requires firms to pay a royalty fee generally ranging from 12.5% to 16.66% on the value of their oil finds. Former Atlantic Richfield Co. marketing managers J. Benjamin Johnson and John Martineck--the whistle-blowers--brought the lawsuit in U.S. District Court in Lufkin, Texas. They will get part of the Kerr-McGee settlement, as is allowed under federal law, for bringing the royalty fee lawsuit. The settlement agreement was signed by representatives of several Indian tribes, as well as the federal government. Shares of Oklahoma City-based Kerr-McGee fell $2.06 to close at $65.63 on the NYSE.