DENVER (AP) — A federal prosecutor says a Texas-based oil and gas company will pay $2.25 million to settle allegations that it underpaid royalties for natural gas produced on federal land in Wyoming.

Colorado U.S. Attorney Bob Troyer said Tuesday that Citation Oil & Gas Corp. was accused of breaking federal law requiring companies to make royalty payments for natural gas produced on leased federal lands. Citation was accused of deducting the cost of making natural gas into a marketable product from its royalties, which isn't permitted.

Citation officials didn't immediately respond to a voicema...