Every year companies from different sectors in North America enter into creditor protection, and this includes the energy sector. Unfortunately, in 2016 over 24 Canadian energy firms filed for bankruptcy, which is the highest number in over two decades.
While the handling of the assets for companies in receivership is quite standard and an accepted practice, the question arises “How do you handle licensed (trade) seismic data when a company goes into receivership” from both the potential acquiring company and also the energy company that is in receivership. APEGA created the “Guideline for Ethical Use of Geophysical Data” which outlines the handling of licensed seismic data and includes the handling of licensed seismic regardless of whether a license agreement for the seismic in question is available.
When energy companies purchase licensed copies of seismic data through a reputable seismic brokerage company or directly from a seismic data company, the purchaser is almost always entering in to a “License to use the Seismic data,” which means that although they can use the seismic data for their own purposes, the ownership of that data remains with the entity that licensed the data. License agreements for these transactions are clear, and the terms and conditions of the license are explicit. In most cases, conditions relating to the handling of licensed seismic in a receivership state that “once a Company becomes insolvent, or makes assignment for the general benefits of creditors, or any proceeding shall be commenced by or against the Company under any bankruptcy or insolvency or creditor protection laws, or proceedings for the appointment of a receiver, receiver-manager or any other official with similar powers for the Company or any of its assets are commenced, or if the Company ceased to carry on business”, the license agreement is terminated.
During the receivership process the licensed seismic falls under the bankruptcy protection laws. The Company while in receivership has access to the licensed seismic, but once a transaction occurs, whether a complete company acquisition or partial asset sale, ALL licensed seismic must be destroyed or returned to the appropriate seismic owner. When the Company is unsure of the current operator of the licensed data, they can submit all of the data back to a reputable seismic brokerage firm for destruction.
Sigma has been in business for 50 years and has maintained exceptional transaction records when it pertains to seismic transactions facilitated through Sigma. If you are skeptical of some of your current seismic records relating to licensed seismic, a call to your Sigma representative is all you need.