Class-action case dismissed after final settlement between WV landowners, gas giants

Diversified has agreed to plug 2,600 wells in West Virginia and five other states through 2034 in the settlement of the lawsuit filed in 2022 in which landowners in Harrison, Nicholas, Preston and Wetzel counties said they were left with unplugged, abandoned wells that pose health risks, degrade the environment and hurt property values.

The landowners contended that Diversified’s acquisition of thousands of wells from EQT was completed with intent to defraud creditors in a business model designed to push off decommissioning liabilities for decades. Diversified and EQT deny any liability or wrongdoing associated with the claims, the settlement indicates. The agreement was approved in the U.S. District Court for the Northern District of West Virginia by District Judge John Preston Bailey.

Mike Becher, an attorney with Lewisburg-based environmental law firm Appalachian Mountain Advocates representing the landowners, indicated Tuesday the plaintiffs look forward to an increase in well retirements that will result from requirements set by the settlement agreement.

"We were happy to achieve this settlement after years of hard-fought litigation on all sides,� Becher said in an email.

Industry experts have said Diversified’s business model is based on acquiring a high number of low-producing wells that yield short-term dividends but present long-term liabilities mounting as the company puts off well decommissioning obligations.

Abandoned and orphaned wells threaten public health and safety by emitting climate-harming methane, polluting groundwater and dotting backyards and wildlife habitats with dangerous equipment that may create sinkholes and hurt wildlife.

A Diversified Energy spokesman said that the settlement reflects what he called “Diversified’s commitment to responsibly managing and retiring our assets� and that the company would “continue to focus on being good asset stewards.�

“Diversified’s commitment to responsibly managing and retiring our assets,� the spokesman said in an email.

An EQT spokesperson did not respond to a request for comment.

Diversified, EQT agreed to pay up to $3.25M each

The settlement class includes all people and entities that own or lease any right, title or interest in the surface of any piece of land in West Virginia, Ohio, Kentucky, Pennsylvania, Virginia or Tennessee that have had a Diversified well between the filing of the complaint in the lawsuit (July 8, 2022) and the date of the signing of the settlement agreement (Nov. 4, 2024). The class includes heirs, tenants and successors of those interest owners.

The court preliminarily approved attorneys from Appalachian Mountain Advocates and ÂÒÂ×ÄÚÉä-based Bailey & Glasser LLP as class counsel.

Under the settlement, class members don’t waive rights to individually apply to applicable state environmental regulators to request their wells be plugged or to assert any claims stemming from damage caused by the plugging of a well, or damage to people or property caused by well-plugging.

Diversified and EQT agreed in the settlement to each pay up to $3.25 million into a settlement account to fund:

• A class agreement notice that consisted mainly of direct mail to “all reasonably identifiable class membersâ€�
• Incentive awards to the named plaintiffs
• Attorneys’ fees and costs

The agreement generally bars settlement class members from suing for 10 years over plugging and abandonment of Diversified wells on property owned or leased by class members.

Diversified touted DEP agreement in defense

Diversified, its affiliates and EQT have argued that an agreement Diversified made with the West Virginia Department of Environmental Protection shielded the company from having to plug wells the landowners said pose health and environmental hazards.

Diversified argued it has no duty to plug wells unless it identifies them as candidates for plugging in annual reports it is required to file with the DEP’s Office of Oil and Gas through 2034. A 2018 agreement between the company and the agency requires Diversified to summarize actions taken to plug oil and gas wells or place them into production during the past year.

Per the agreement, Diversified must either place into production or plug at least 50 oil and gas wells for which no production was reported in 2017 every year from 2020 through 2034, of which at least 20 must be plugged each year.

Citing an Office of Oil and Gas estimate that Diversified has more than 2,300 abandoned wells, Bailey observed in a 2023 court filing that at a rate of 50 wells per year, plugging all the wells could take 480 years.

Most of Diversified’s roughly 70,000 wells are in Appalachia, acquired since 2018 from regional producers such as EQT and Canonsburg, Pennsylvania-based CNX Resources.

The lawsuit asked the court to make EQT liable for plugging and decommissioning the wells that Diversified took responsibility for in 2018 and 2020, contending that those transfers were fraudulent.

The allegation of fraudulent transfers is tossed under the agreement.

To the extent that Diversified plugs wells on the property of a class member, all claims the member may have against Diversified or EQT regarding well plugging or abandonment of the wells are to be “automatically and immediately released for all time.�

Much of the lawsuit was based on a report published in April 2022 by the Ohio River Valley Institute, a Johnstown, Pennsylvania-based pro-renewable energy nonprofit think tank. That report predicted it was highly unlikely that Diversified will have enough money to plug and abandon all its wells.

The lawsuit cited the report to contend that if Diversified had used industry norms to calculate its plugging and decommissioning obligations, then its liabilities would exceed $2 billion instead of the company’s self-reported figure of roughly $520 million, making Diversified insolvent.

Agreement approved $6M+ in cost coverage for plaintiffs  

The agreement approves attorneys’ fees exceeding $4.3 million, litigation costs of roughly $1.9 million and service awards totaling $96,000 to be distributed in $3,000 increments to 31 people and one trust.

Approval of the Diversified and EQT commitment to funding the class settlement follows signs of financial strength for both companies.

In a May 12 earnings presentation, Diversified reported $1.8 billion in shareholder returns and debt principal payments since the company’s 2017 initial public offering, or when a private company first sells its shares to the public.

EQT reported a total company value of roughly $39 billion in an earnings presentation last month and boasted a 2025 first-quarter free cash flow of more than $1 billion. Free cash flow generally is what cash remains after paying operating and capital expenses.

EQT closed acquisition of Washington County, Pennsylvania-based Mountain Valley Pipeline lead developer Equitrans Midstream Corp. last year.