Oz Beach Cancels Otway Drilling Contract

Sydney-listed Beach Energy, as the operator of the Victorian Otway Basin joint venture, has issued Diamond Offshore Drilling with a notice of termination for the Ocean Onyx rig contract, it said April 20.

“The semi-submersible Ocean Onyx rig arrived in Victorian state waters in mid-April for commencement of the Victorian Otway Basin offshore drilling campaign. As the arrival date was later than had been agreed and specified in the rig contract, Beach exercised its right to terminate the agreement,” the company said.

Beach thinks that offshore drilling is unlikely to begin until the financial year 2020-2021 (July-June), with the exact timing to be agreed as part of any new contracting process. The cancellation of the contract will not have any impact on Beach’s 2019-2020 production estimates, it said. The production guidance for the year to June 2020 remains unchanged at 27-28mn barrels of oil equivalent.

Meanwhile, Beach said it is planning to spud the Black Watch-1 onshore to offshore exploration well in the second half calender 2020. "This well will increase Otway Gas Plant output when it is tied in later this quarter," it 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).