2024 is shaping up to be another busy year for mergers and acquisitions. When companies prepare for a divestiture or asset sale, it must be determined if the seismic data should be included as part of the asset package that is being divested. Questions that we often hear are how does this work, and what are the advantages or disadvantages of including our seismic data in the divestiture.
Before any seismic data is included in the data room, the status of the data should be determined (Licensed or Proprietary).
Licensed data or Trade data is seismic data that you have no ownership rights. You only have a licensed copy of the data and are not allowed to sell or divulge this information without permission from the owner. Permission must be obtained prior to showing the data in a data room. This data must be clearly identified as Licensed on all maps that are included in the data room and only shown if approval is provided. A review of the license agreements pertaining to the licensed data is the best course of action regarding it’s use in a data room. Most companies choose to leave out this type of data and only show Proprietary data. The successful acquirer of the assets may elect to purchase a copy of this data from the current seismic data owner after the acquisition is completed.
Proprietary data is seismic data that you have ownership rights. You may own the data 100%, have partners, or you may be a partner. Most of this data can be included in a data room, and your ownership percentage should be noted. Some joint venture (partner) data requires approval from other partners to make the data available for the data room. It is important to review partner agreements prior to adding partner data in a data room. To make it easy, the data is listed as Exclusive (100%), Operated (where your company is the operator but there are partners on the data), or Non-Operated (data where you only hold a partnership interest, another company is the operator). Depending on the structure of the divestiture you can sell a licensed copy of this data, or you can divest your ownership rights. *Please note that there are some agreements pertaining to Proprietary data (specifically UNIT Seismic) that have terminology that you cannot transfer ownership unless all the other partners agree.
Once you decide what data is to be shown in your data room, you need to decide whether you want to divest your ownership or provide a licensed copy.
If you are selling a licensed copy, you must make sure that a licensing agreement is executed and that any partners are compensated for their portion of the license.
If you are selling your ownership there are a few more steps involved. You should notify partners in the data that you are divesting your ownership and indicate who their new partner is. For any data that there are partners involved, you are NOT permitted to keep a licensed copy of the data unless you pay the partners their portion of a licensed copy transaction. You must execute a licensing agreement to indicate that you have retained a licensed copy of this data. If you are not keeping a copy of the data, the data needs to be deleted from all internal and external storage facilities. Please note that all internal computers must be searched and scrubbed to confirm that this data, including any seismically derived product, is not contained in any project work. You should also provide AFE or other relevant project documents.
Assisting divesting or acquiring companies with the seismic data during an acquisition or divestiture is a service that Sigma provides. Contact your Sigma representative with any seismic related questions.
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