Beach Cancels Rig Contract With Diamond Offshore

Beach Cancels Rig Contract With Diamond Offshore
The companies are considering a new contract for 2021.

Beach Energy Limited, as operator of the Victorian Otway Basin joint venture with OGOG (Otway) Pty Ltd., has issued a contract termination notice to Diamond Offshore Drilling Inc. for the Ocean Onyx rig.

The semi-submersible rig arrived in Australia’s Victorian state waters in mid-April to start the Victorian Otway Basin offshore drilling campaign. As the arrival date was later than what had been specified in the contract, Beach exercised its right to terminate the agreement.

The companies are discussing future operations regarding the Ocean Onyx rig and the Victorian Otway drilling campaign, with a view to establishing a new contract. Beach’s preliminary assessment is that offshore drilling is unlikely to start until 2021.

Separately, the onshore to offshore Black Watch-1 well was recently completed after intersecting the target Warre C reservoir in-line with pre-drill expectations, the company said in a written statement. The well is expected to increase Otway Gas Plant output when it is tied in later this quarter.

For Q3 FY20, Beach’s sales revenue was $431 million, down 7% from the prior quarter, due to the lower oil price through the end of the period, partly offset by higher realized gas prices. As of March 31, the company had a net cash position of $80 million with access to $530 million in liquidity.

A review of planned 2021 is activities is underway, and Beach is targeting a deferral of up to 30% of previously planned capital expenditures for the year.

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