Chesapeake Energy Corporation (NYSE:CHK) was penalized by the U.S. Department of the Interior for reporting incorrect sales volume of oil and natural gas. The second largest natural gas producer in the country was ordered to pay a civil penalty of $765,000.
According to the Office of Natural Resource Revenue (ONRR) of the agency, Chesapeake Energy Corporation (NYSE:CHK) knowingly or willfully submitted inaccurate information on its oil and gas royalty reports.
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In a statement, ONRR Director Greg Gould said, “We are fully committed to collecting every dollar due to the American taxpayer, and it is simply unacceptable for Chesapeake Energy to misreport sales volume information. Chesapeake Energy has been repeatedly warned about its inaccurate reporting on this oil and gas lease from May 2011 through July 2012.”
The Office of the Natural Resource Revenue started auditing the American Indian oil and gas lease of the energy company in October 1, 2009. According to ONRR, Chesapeake Energy Corporation (NYSE:CHK) failed to comply with the directive to report additional volumes on its royalty reporting forms at the time.
The agency said the energy company submitted the required corrections not until April 2011. However, the auditors of ONRR found out that Chesapeake Energy Corporation (NYSE:CHK) resumed its practices in misrepresenting its oil and gas sales volume the following month. The energy company received two separate warnings from the ONRR auditors for continued violations on October 6, 2011 and September 4, 2012.
“Despite these repeated warnings, Chesapeake failed to take actions to prevent such incorrect reporting and continued to submit reports with the same inaccuracies,” said Gould.
The ONRR concluded that Chesapeake Energy’s repeated practice in submitting inaccurate report about its oil and gas sales volume was “knowing and willful.” The agency said the civil penalty against the company was issued on March 13, 2013, and the company may request a hearing regarding the fine.
The ONRR is part of the Policy, Management and Budget of the Department of the Interior. It is responsible in collecting and disbursing revenues from energy production onshore on the federal and American Indian lands and offshore in the Outer Continental Shelf.
Yesterday, Analysts at Wunderlich Securities were optimistic that the triumvirate CEO of Chesapeake Energy Corporation (NYSE:CHK) would be able to lead the company to execute its debt reduction plan and achieve a higher value for the shares of the company.