SWN Production (Arkansas) LLC, the gas production company also known as Seeco Inc., has agreed to pay the federal government $950,000 to resolve claims that the company tapped unleased federally owned minerals in Conway and Van Buren counties over a three-year period.
Details of the settlement, which must be paid within 45 days, were released Tuesday by the the office of Chris Thyer, the U.S. Attorney for the Eastern District of Arkansas.
The U.S. Attorney’s office said Seeco’s Arkansas natural gas production company trespassed into federal minerals from 2008-10 by drilling two wells “for the purpose of obtaining minerals for private gain.” One well was the Salinas, Reyes 09-15 #2-20H in Conway County, and the other was the Griggs 11-15 1-26H in Van Buren County.
In a statement, Seeco said it discovered that it had “inadvertently drilled the wells” and reported the error to the Bureau of Land Management.
“Over the past decade Seeco has drilled more than 4,000 wells in the Fayetteville Shale. In two instances, one in 2009 and the other in 2010, Seeco discovered that it had inadvertently drilled wells under federal lands without having previously obtained appropriate rights,” the company said.
“In each case Seeco immediately reported the mistake to the Bureau of Land Management. Seeco voluntarily paid over the royalties that were due, and the Bureau of Land Management granted Seeco rights retroactive to the dates the wells were first produced. There has been no allegation that Seeco underpaid any royalties.”
Seeco’s spokeswoman, Christina Fowler, told Arkansas Business that the company paid the U.S. Department of the Treasury a royalty when it self-reported the mistake. Tuesday’s $950,000 settlement avoids litigation over whether Seeco’s actions “were willful, intentional or in bad faith,” which the company denies.
The company “has fully cooperated” with the government in its investigation, the U.S. Attorney’s office said.
“This civil settlement should remind the oil and gas industry that the Department of the Interior is monitoring federally owned mineral interests, and that the Department of Justice will hold companies responsible if they trespass,” Matthew Elliott, Assistant Inspector General for Investigations, Office of Inspector General, U.S. Department of the Interior, said in the release.
Seeco is a subsidiary of publicly traded Southwestern Energy Co. of Houston (NYSE: SWN).