A Farmington business woman accused of failing to pay more than $2.1 million in oil and gas royalties entered a plea agreement Thursday in U.S. District Court in Albuquerque.
Teresa McCown, 55, admitted that as the owner of M&M Production & Operation, Inc. and Shoreline Oil & Gas Co., she violated federal royalty and management and enforcement and committed wire fraud.
This resulted in the Jicarilla Apache Nation, Navajo Nation and federal government losing $2.19 million in taxes and royalties for oil and gas produced on federal and Indian leases between 2017 and 2023, according to court records.
In court, McCown stated M&M Production & Operation, Inc., had “17 federal leases with 35 associated wells” and “six Indian leases with six associated wells,” which were within the jurisdiction of the BLM’s Farmington Field Office.
McCown also stated M&M Production held “one federal with one associated well” and “six Indian leases with 19 associated wells” all within the jurisdiction of the BLM’s Rio Puerto Field Office.
Shoreline Oil and Gas Co. held “three Indian leases with 15 associated wells” within the jurisdiction of the BLM’s Rio Puerto Field Office, McCown stated.
McCown stated that as the lease operator, she was the one “responsible for the accounting and reporting of mineral production from leased lands, and I am responsible for the payment of royalties to the mineral interest owners for my companies' shares of the gas and minerals removed from the leased lands.”
She admitted “through my companies, I falsely reported gas extraction amounts and other times failed to report them at all and subsequently failed to pay due royalties and interest. During the periods that I failed to pay royalties and failed to correct my violations."
Because of this, McCown was “assessed notices for noncompliance and civil penalties for failures to accurately report oil and gas extraction,” and she stated, “have not taken any corrective action.”
In her plea, McCown admitted to filing more than “400 incorrect reports on Indian and federal leases" and “there are approximately 1,000 missing or unfiled OGOR reports for at least 32 leases or agreements,” which McCown falsely reported gas extraction amounts, and failed to pay due royalties and interest,” according to a press release from the U.S. Attorney’s Office.
As part of her plea agreement, McCown agreed to “liquidate personal properties in Farmington and Rio Arriba County, an RV, and two motor vehicles” of which she will use the proceeds for restitution she owes, court records state.
McCown will be on conditions of release pending her sentencing, and she faces up to 20 years in prison. When released she will be subject to up to three years of supervised release.
The Department of the Interior, Office of Inspector General, Office of Investigations, Energy Investigations Unit investigated this case.
Assistant U.S. Attorney Alexander Flores is prosecuting the case.
