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Cutting Your Prospect down to Seismic: The Legal Aspects of Contracting For Seismic Services and Data

Warren J. Ludlow , Oil & Gas Agreements: The Exploration Phase (2004)

Twenty-five years ago, oil and gas explorers were happy if a third of their exploratory wells turned out to be producers. But with the development of seismic techniques, especially three-dimensional or 3D seismic, today's explorationists are not satisfied unless the success rate of their exploratory wells is over two-thirds. Because of these dramatic increases in drilling success rates, most wells drilled today utilize the aid of seismic data.

This paper will give a brief description of what seismic is and how it is acquired and processed. It will focus on the legal aspects of seismic data, particularly the various types of contracts relating to the acquisition, use and licensing of seismic data, with special emphasis on clauses dealing with exceptions to confidentiality obligations, risk allocation in connection with seismic operations, and the right to sublicense and transfer seismic data. It will also examine whether seismic data qualify as trade secrets. In addition, the paper will include checklists of what provisions contracts dealing with seismic data typically contain.

Although the paper cites cases and legal treatises where appropriate, the focus is on the practical aspects of contracting for seismic data rather than an in depth legal analysis. Where there is some legal analysis, the paper tends to focus on Texas law.