Diamond Offshore Sues Oz Beach for Contract Termination

New York-listed Diamond Offshore Drilling has sued Australian oil and gas explorer Beach Energy for terminating a drilling contract, Sydney-listed Beach said April 28 in a statement.

Earlier this month, Beach, as the operator of the Victorian Otway Basin joint venture, issued Diamond Offshore with a notice of termination for the Ocean Onyx rig contract. The company said the rig's arrival date was later than had been agreed upon. On April 27, Diamond Drilling filed a voluntary chapter 11 petition in the US bankruptcy court in the Southern District of Texas.

Diamond filed a complaint in that court seeking a determination that the termination of the contract by Beach is invalid and that the drilling contract remains in effect. Diamond in its petition said it has spent more than US$100mn over the last year building and transporting a rig to a site in accordance with the drilling agreement with Beach.

Beach has denied the claim and said it will defend any claim that the contract was not validly terminated.

“As previously advised despite the commencement of legal proceedings Beach is engaged in without prejudice discussions with regard to the future operations of the Ocean Onyx rig and the Victorian Otway Basin offshore drilling campaign,” the company said.

Last month, Beach cut its capital expenditure by 30% in the financial year 2020-2021 relative to its prior planning due to a drop in oil prices. The capital expenditure for 2019-2020 remains unchanged at A$875-950mn (US$555mn-602mn).