History
Venture Seismic grew by buying two seismic contractors, then collapsed into Canadian creditor protection in 1999 after a customer seized a key survey vessel.
1996-1997: Buying into the southern US
Venture Seismic was a Calgary-based contractor that gathered seismic data (underground sound-wave images) for oil and gas explorers. In June 1996 it made its first acquisition, buying Boone Geophysical, a Texas land seismic contractor, for $1.75 million, mostly in cash plus stock. The company was riding the industry's shift from 2D to 3D surveys.
The first annual report, covering fiscal 1996, showed revenue of $14.1 million but also a net loss, against a profit the year before. Costs of integrating Boone cut gross margin to 15.2% of revenue from 29.0%, and the pretax result swung to a loss of 7.2% of revenue from an 8.0% profit.
1997-1998: Growth and a second deal
Fiscal 1997 was stronger. Revenue nearly doubled to $27.1 million, reflecting a full year of Boone and strong industry demand. In November 1997, after the stock traded above $9 for 20 straight days, Venture called its redeemable warrants for redemption at $0.10 each, pushing holders to exercise at $6.00 a share or lose them.
In December 1997 Venture announced a letter of intent to buy Continental Holdings, a private Calgary marine (vessel-based) seismic operator, for roughly $14.5 million in cash and stock. The terms were revised in February 1998 to 2,080,000 Venture shares plus $1.5 million cash, along with a $4 million advance to refurbish a second vessel, convertible to equity if the deal failed. The definitive agreement followed in March.
1998: Closing amid trouble
In July 1998 Venture warned of a significant third-quarter loss, caused by Boone's reduced revenue from scheduling and equipment shortfalls. Later that month it closed the Continental purchase. The 2,080,000 shares were about 31% of Venture's stock, and the former owners also received $0.5 million cash and $1.0 million in notes. Continental's principal, Leslie Stinn, joined the board.
The June quarter confirmed the loss. Total assets rose to $31.0 million from $22.6 million with Continental consolidated, and short-term debt was rising. In December, Venture took a $3 million bridge loan (net $2.7 million, secured on all of Continental's stock, due April 1999) and formed a special board committee. It flagged a preliminary fourth-quarter loss of $0.10 to $0.15 a share after a hurricane-hit Gulf of Mexico marine survey, and disclosed a new $30 million lawsuit over a Boone workplace injury.
1999-2000: Seizure and bankruptcy
The decisive blow came when Western Geophysical seized Continental's Pacific Titan survey vessel. The dispute went to litigation, with Continental countersuing for over $20 million. In January 1999 four of Venture's six directors and nearly all of Continental's officers and directors resigned. Venture also revealed that the dispute lay behind its overdue annual report, and Nasdaq gave notice it would delist the stock on January 22, 1999 unless the report was filed.
Venture and Continental filed for creditor protection under Canada's Companies' Creditors Arrangement Act, with KPMG as court monitor. Boone and Hydrokinetic Surveys were not included. On March 8, 1999, with only 30 holders of record left, Venture deregistered from SEC reporting, ending its life as a public company. As of the last record, in February 2000, the company was deregistered and in Canadian bankruptcy proceedings.
Written from the 16 story beats below (1996 to 8 Mar 1999), which come from the company's own announcements and filings.