Most of the Dimock Township, PA, residents who filed a lawsuit against Cabot Oil & Gas Corp., alleging the company contaminated their water wells, have agreed to an undisclosed settlement, according to documents filed in federal court on Monday.

Although a motion for miscellaneous relief was filed in U.S. District Court for the Middle District of Pennsylvania for the case, Fiorentino et al v. Cabot Oil & Gas Corp. et al (No. 09-cv-2284), it wasn't clear how many of the plaintiffs have agreed to settle with Cabot because their names were redacted on the documents.

During a 2Q2012 earnings call on July 25, Cabot CEO Dan Dinges said 32 of the 36 households involved in the lawsuit had verbally agreed to settle the case. He didn't disclose the amount of the settlement, but did say "the aggregate value of the settlements are not a material item with respect to Cabot's financial statements. Resolution of this litigation will have a very positive impact on [general and administrative costs] going forward due to the reduction in cost of defense."

Sixty-three residents of the Susquehanna County township filed the lawsuit against Cabot in November 2009, alleging the Houston-based company contaminated their groundwater supplies through drilling activities. The long-running saga in Dimock began on Jan. 1, 2009, when a residential water well exploded (see Daily GPI, Jan. 26, 2009).

According to court documents, Cabot sent the plaintiffs' attorneys settlement offers in May and June, and asked that the plaintiffs sign confidentiality agreements to prevent disclosure of the settlement terms. Dismissal papers are to be filed within seven days of Cabot transferring the settlement money to the plaintiffs. The documents also show that both parties hope to settle the case within 60 days.

"My family is relieved to move forward and put this behind us," Victoria Switzer, one of the plaintiffs who agreed the settlement and lives in the affected Carter Road area of the township, told NGI's Shale Daily on Wednesday. "If you live in a gas field, I advise folks strongly to work with the gas company when they have concerns or disputes."

Switzer said she did not know how many plaintiffs ultimately decided to accept the settlement. She also declined to say whether she was pleased with the settlement terms.

Rumors of a settlement between the two sides had been brewing for months, but picked up after a series of findings that seemed to exonerate Cabot of responsibility for any groundwater contamination. Several rounds of testing by the U.S. Environmental Protection Agency (EPA) determined that water from private wells was safe to drink (see Shale Daily, July 26; April 10; March 19). Separate testing by the Pennsylvania Department of Environmental Protection (DEP) arrived at the same conclusion (see Shale Daily, Jan. 23).

The DEP investigated the 2009 explosion and determined that Cabot was responsible for methane contamination in water wells serving 19 households, a charge the Houston-based company denies. Cabot settled the issue with the DEP in December 2010 without accepting blame but nevertheless agreeing to pay the affected residents $4.1 million and provide whole-house gas mitigation systems (see Shale Daily, Dec. 17, 2010).