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Diamond Offshore sues Beach over rig cancellation
PROJECTS & COMPANIES
HOUSTON-BASED Diamond Offshore Drill- ing is suing Australian independent Beach Energy in a US court over an alleged breach of contract relating to the Ocean Onyx rig.
Beach said on April 20 that it had terminated the Victorian Otway Basin Joint Venture’s con- tract with Diamond Offshore for the rig because of the vessel’s late arrival in Victorian waters. The company noted in its April 22 results announce- ment that it had a “good working relationship” with Diamond Offshore and the two were in talks regarding a new contract. Beach added that it did not expect to begin drilling until financial year 2020-2021.
Diamond Offshore, however, filed for Chap- ter 11 bankruptcy protection on April 26, asking at the time to rule on whether Beach’s termi- nation of the contract was valid. Beach said on April 28 that while it was determined to defend against Diamond’s pursuit of damages, both companies remained “engaged in without prej- udice discussions” regarding the use of Ocean Onyx in a future offshore drilling campaign.
Beach operates the Victorian Otway Basin Joint Venture with a 60% stake, while OG Energy
owns the outstanding interest. The developer has said the rig cancellation will not affect its 2019- 2020 guidance, which remains unchanged at 27-28mn barrels of oil equivalent (boe).
As with other Australian upstream compa- nies, Beach has been looking to trim its spend- ing where possible. In its results statement, the company said it was reviewing its budget for 2020-2021 and “aimed to defer up to 30% of its previously planned capital expenditure”.
Diamond Offshore, which has debt of more than $2.6bn, cited the “unprecedented” impact of the oil price war last month, combined with the toll the coronavirus (COVID-19) pandemic was taking on demand.
The bankruptcy filing came 10 days after the company missed an interest payment on $500mn worth of bonds, saying at the time it was exploring its options for the future with advis- ers. Diamond had already taken various steps in an attempt to bolster its balance sheet, includ- ing cutting jobs and borrowing $400mn under a revolving credit facility in March. However, it now says the Chapter 11 bankruptcy filing repre- sents the best return to shareholders.™
Galilee prepares to spud Glenaras well
PROJECTS & COMPANIES
AUSTRALIAN junior Galilee Energy is pre- paring to spud a weLl at its Glenaras coal-bed methane (CBM) project in Queensland’s Galilee Basin after completing its initial exploration pro- gramme at the Kumbarilla project.
Galilee said on April 30 that it aimed to drill the Glenaras 17 vertical monitoring well within “the next two to three days”.
Galilee is targeting coal seams located within the 4,000-km square ATP 2019 and aims to confirm the extent of pressure deple- tion around the multi-lateral pilot and pro- vide greater insight into the “areal influence and subsurface volume of coal the pilot is accessing”.
The company said the project’s other wells, which will not be interrupted by the drilling work, had continued to run without issue and at maximum drawdown during the quarter.
Galilee added: “Water rates are still declining, albeit slowly, with significant water production and pressure support continuing from the Gle- naras 12L and 15L area. These two wells account for 80% of the total water rates from the pilot.”
It said it had not conducted any further pres- sure testing on the wells but added that pressure build-up data would be gathered in parallel with the drilling of the monitoring well. The company aims to directly compare both sets of data in the coming weeks.
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