Background: Cabot Oil & Gas Corporation is a petroleum, natural gas, and natural gas liquids exploration and production company based in Houston, Texas. Cabot is interested in drilling exploratory horizontal hydraulic wells in Holmes, Richland and Ashland counties. Cabot has entered into a sublease agreement with Columbia Gas Transmission L.L.C. to explore below the gas storage fields located in these areas. Cabot has contracted with Western Land Services to go door to door to convince landowners to lease their land to Cabot Oil & Gas to give them the ability to drill extraction wells. Landowner groups like C.O.L.A. form to deal with the offers made by companies such as Western Land Services under the premise of obtaining the ‘best deal’.
I attended a landowners group that had recently formed in Holmes County, Ohio. I rode with a friend who owns property in the area and was concerned about the possibility of an unconventional horizontal hydraulic fracturing extraction well being drilled in the area. Apparently this startup group, headed by a man named Rob Conley, called the Holmes County Landowners Association or the Central Ohio Landowners Association (C.O.L.A.) had held an initial meeting in which over 100 landowners attended. This was the second meeting and my friend was happy to have me along. We discovered later that ‘good neighbor’ Rob had lived in the area less than 2 years and no one really knew much about him.
The meeting was held in the auditorium of West Holmes High School and attended by about 70 people, with a third representing the Amish community. There was a table way up front with a couple attorney types seated and a woman wandering around who pushed a clipboard at us after we were seated stating, “If you sign it, it is legally binding.” Not having a clue I didn’t touch the form, but my friend accepted, asking if she could take it home and look at it, to which the lady said yes.
Rob Conley started speaking soon after and explained that his ‘day job’ was convincing landowners to sign leases in Pennsylvania and West Virginia… an oil and gas land man! With silver tongue he began to weave a tale of riches and royalties, explaining how he was a neighbor and wanted everyone to join together so he could obtain the best deal possible for all of them, after all he knew well the type of silver tongued individuals they would have to be dealing with. Promises of endless checks for “50 to 60” years from all the oil that Cabot was going to find and he was willing to do this for a small percentage, 1% or maybe a little more if he could convince the drilling company to go higher than 12.5%. Now 1% doesn’t sound like much unless I clarify that the 1% is a portion of the 12.5%, which translates to an 8% payout of the landowner’s piece of pie for Mr. Conley, from every landowner that signs his contract.
In addition to royalties, landowners are offered a signing ‘bonus’ and here in Northeast Ohio Cabot is willing to offer $25 per acre. Rob states that he has decided, (or maybe the ‘board’, I wasn’t clear) to forego any fees on the bonus, no matter what amazing increase he can convince Cabot to pay. In other words, he’s willing to work for free to obtain more money for his new friends. So one lawyer speaks up and says, “So we need to change the contract and I want everyone to take a pen and just make a line through item 4.” Wait, what? They handed folks a contract, told them it was legally binding and then told them to alter it? This led to another discussion about altering some of the royalty numbers on the contract too. Plus, I neglected to mention that there was an ‘A’ contract and a ‘B’ contract to choose from dependent on how much of your mineral rights had previously been taken away.
After this fiasco he opens a Q & A period, skillfully spinning almost every question into an answer that resembled, “We are all going to get rich off the royalties.” At one point the attorney, (whom my friend said looked like Lee Marvin’s brother) started tantalizing folks with visions of seven figure checks by claiming that Chesapeake had paid landowners in eastern Ohio millions of dollars in signing bonuses, “They had made millionaires of a whole bunch of them.” He continued that Chesapeake had signed a five year lease and could have made them millionaires twice over, however they never came back and renewed the lease and he didn’t know why. It seemed quite insulting to local landowners who were being offered a tiny sign on bonus.
Well I knew why and I had heard enough embellishment from the both of them, so I quietly asked my friend if she was about ready to go. I had noticed that the questions were leaning towards ‘I’m not impressed’ and a couple folks had wandered out already. She said that she could be ready to go soon. I stated that I was going to pull the plug on the meeting by asking a question, walking out after the answer and that she could join me outside at her leisure. Rob fumbled through another question and I heard a man’s voice yell, “Bullshit!” from over to our right. I raised my hand, was recognized and stood up. He hadn’t been repeating the questions and there were complaints from the attendees that they couldn’t hear, so I wanted to be sure they heard what I asked. I began, “I have some concerns about the production data you are giving us.
The numbers I have seen from the Marcellus wells in Pennsylvania show that peak production drops after two or three years and the wells are almost done producing at five years. You stated that these royalty checks would be rolling in for 50 -60 years so I’m interested to know where that information came from and if you’re willing to guarantee the landowners royalty payments for that amount of time?” To his credit his mouth started moving in high gear as he fumbled to correct his previous misrepresentation and he stated something like, “I shouldn’t have said 50-60 years since they hadn’t been horizontal drilling and fracking for nearly that long and there wasn’t actual data to back it up.” He went on to mumbo-jumbo another calculation about everyone getting rich, blah, blah, blah. I waited patiently, until his lips slowed a bit and finished him off. “I want to thank you and the rest of the people in your group for giving us this information tonight.
I feel it’s my duty to let the landowners here know that I have family in Pennsylvania and there are folks in Northeast Pennsylvania that signed with Chesapeake Energy Corporation a few years back with big dreams of getting rich. In 2015, when the well production slowed to almost nothing, Chesapeake sent bills to landowners instead of royalty checks. There’s no guarantee that anyone in this room will make anything by signing away their mineral rights and you clearly aren’t going to put a guarantee in the contract either. Thank you and good night!”
I turned and walked out of the school’s amphitheater and on outside to the cool night air. A half dozen people followed immediately behind and we chatted. “Is anyone here going to sign?” I asked. A chorus of NO’s answered. Multiple comments in regards to fracking and the presentation were soon to follow, none in favor. A young Amish man asked if I thought he should sign and stated that he owned his mineral rights. I told him his property was much more valuable with him owning the rights and I wouldn’t sign if it was me. He agreed and seemed inclined to say “NO!” to C.O.L.A., Columbia Gas and Cabot.
On the way home my friend and I discussed what had transpired and came to a few conclusions: signing a contract with C.O.L.A. was foolish, signing away mineral rights was a very bad idea, and that Rob Conley misrepresenting royalties, production data and large piles of money was lying. Lying to the same neighbors he claimed to want to protect from the land men. He did not show the map referred to in the letter that would indicate all the people and their acreage who had thus far joined C.O.L.A. Another resident remarked that this makes me think the secret meaning of C.O.L.A. must be ‘Cabot Oil Land Appropriation’! Cabot Oil and Gas is just another corporate entity wanting to use the land for profit without regard for the folks who live in Holmes, Ashland and Richland Counties. C.O.L.A. is a fizzled and flat promise of riches that would help Cabot achieve their unconventional extraction by controversial hydraulic fracturing, leaving the people of this rural community with nothing but a bad taste in their mouth and quite possibly a deadly one in their water.
(This is part 1 of 3 in a series detailing Cabot Oil’s practices)
