Diamond files complaint against Beach over ‘invalid’ rig contract termination

  • Business & Finance

Offshore drilling contractor Diamond Offshore has filed a complaint against Australia’s Beach Energy claiming that the oil company’s termination of a drilling contract for the Ocean Onyx rig is invalid. Beach has denied the claim.

Ocean Onyx
Ocean Onyx; Source: Diamond Offshore

To remind, Beach Energy on 20 April terminated a contract with Diamond Offshore for the Ocean Onyx drilling rig, citing delay in rig delivery as a reason behind contract termination.

The rig was supposed to be used for the development of Beach’s undeveloped Otway Basin gas reserves, as well as exploration for additional gas reserves, targeting increased gas supplies for the Victorian gas market.

On 26 April 2020, Diamond filed a voluntary Chapter 11 petition in the United States bankruptcy court in the Southern District of Texas to restructure and strengthen its balance sheet.

As a result, Diamond received a delisting notice from the New York Stock Exchange (NYSE) as the company is no longer suitable for listing due to its Chapter 11 filing.

At the same time as filing for Chapter 11, Diamond also filed a complaint in the court seeking a determination that the termination of the contract by Beach is invalid and that the drilling contract remains in effect.

Diamond alternatively seeks damages in an amount to be determined at trial, Beach Energy said in a statement on Tuesday.

In the statement, Beach denies the claim and will defend any claim that the contract was not validly terminated.

Beach said that, together with its Joint Venture Partner OGOG (Otway), it remains committed to the development of its undeveloped Otway Basin gas reserves, as well as exploration for additional gas reserves, targeting increased gas supplies for the Victorian gas market.

Beach reiterated its previous statement saying that, despite the beginning of legal proceedings, it 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.

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