2ndUPDATE: Plains Exploration Pays $900,000 Civil Penalty

-Plains Exploration & Production Co. (PXP) has paid almost $900,000 to resolve allegations that it failed to comply with a request to submit oil and gas production reports, the U.S. government said Friday, as regulators push to hold oil and gas companies accountable at every level of operations.

The Houston company "repeatedly failed to comply with requests" to submit monthly oil and gas operations reports for Pogo Producing Co., which Plains acquired in November 2007, the Bureau of Ocean Energy Management, Regulation and Enforcement said in a statement. Without the production reports, the agency was unable to verify whether royalties paid for production from leases on federal lands were correct.

"We will aggressively pursue every dollar due from energy production on Federal and American Indian lands," BOEM Director Michael R. Bromwich said in a statement. "BOEM auditors are continuing to closely examine all reports from companies to ensure that they are accurate and submitted on time, with no exceptions."

The agency said it must still compare royalty reports and payments to the production reports to determine whether Plains owes additional royalties. The company's directors include Thomas A. Fry III, who was once the director of the agency, previously known as the Minerals Management Service. Fry was also a director of Pogo up until the November 2007 merger with Plains.

Plains spokesman Scott Winters didn't respond to a request for comment.

It was the second large payment involving Plains this week. On Tuesday, Plains All American Pipeline and some subsidiaries agreed to spend $41 million to upgrade crude-oil pipelines to resolve allegations involving crude-oil spills in four states. The company also was hit with a $3.25 million civil penalty.

The federal royalty-collection agency said that it put Plains on notice that the company was out of compliance with reporting requirements following the acquisition. When Plains failed to comply with that notice, the agency said, it ordered an $838,272 civil penalty. The company ultimately paid $899,200 because penalties continued to accrue, the agency said.

Plains has now submitted all the required monthly production reports, the agency said. The process of levying the civil penalties began before Bromwich signed on to lead the BOEM, spokeswoman Melissa Schwartz said. Bromwich has vowed to make aggressive investigations of oil and gas companies a "hallmark" of the agency.

-By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; siobhan.hughes@dowjones.com

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