April 27 (Reuters) – Diamond Offshore sued Australian oil and gas producer Beach Energy Ltd for abruptly terminating a $65 million drilling contract, the offshore rig contractor that filed for Chapter 11 bankruptcy protection said.
Diamond Offshore, which filed for bankruptcy protection on Sunday, said Beach terminated the agreement, claiming Diamond Offshore missed a “contractual milestone to deliver the rig.”
The Houston-based contract driller said the delay was “largely of Beach’s own making” and an attempt to renegotiate the deal for more favorable terms. Diamond asked the court to declare the termination notice invalid.
Beach was not immediately available for a comment outside office hours.
Prices and demand for oilfield services has worsened since the launch of a “price war” between OPEC and Russia and a steep cut in oil demand caused by the coronavirus pandemic.
Under the drilling agreement, the rig would have been used to drill six wells over a year and Diamond Offshore stood to earn a minimum of about $65 million or more, if Beach exercised some of its options.
Diamond Offshore said it had spent more than $100 million to prepare and transport the deepwater rig to execute the drilling program in the Otway Basin off the southern coast of Australia to fulfill the contract. (Reporting by Arathy S Nair in Bengaluru;)
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