Beach Energy accused of invalid contract termination

Beach Energy Ltd., Adelaide, has been accused by US drilling company Diamond Drilling Inc. of an invalid termination of its drilling contract for the Ocean Onyx semi-submersible to drill in the offshore Otway basin.

Beach said that Diamond Drilling has filed a voluntary Chapter 11 petition in the US bankruptcy court in the Southern District of Texas and at the same time filed the complaint in that court seeking a determination that the drilling contract with Beach remains valid. Diamond is seeking damages, the amount to be determined at trial.

Beach said it denies the claim and will defend any action suggesting that the contract was not validly terminated.

Last week Beach said that the Ocean Onyx had arrived in Victorian waters in mid-April, but that date was later than had been agreed and specified in the contract. The company exercised its right to terminate the agreement (OGJ Online, Apr. 20, 2020).

Despite the commencement of legal proceedings, Beach said it is still engaged in “without prejudice discussions” with regard to the future operations of the Ocean Onyx and the company’s Victorian Otway basin drilling program.

Beach added that offshore drilling is unlikely to begin until the financial year 2021.

Diamond Drilling has five of its deep-water rigs in Australasian waters, including Ocean Monarch and Ocean Onyx.