Beach Energy (ASX:BPT) terminates tardy rig contract

• Beach Energy (BPT) has terminated its rig contract with Diamond Offshore Drilling for its Otway Basin drilling program after the rig arrived late
• Beach, along with Joint Venture partner OGOG, had booked the rig for a drilling program in the Otway Basin in offshore Victoria
• While the termination of the contract will incur some costs, Beach has assured shareholders these are not material and will not impact upon its FY20 guidance
• The company is now in discussions with Diamond and is looking at drawing up a new contract, likely to only start in FY21
• Company shares are down 1.44 per cent and trading for $1.37

Beach Energy (BPT) has terminated its rig contract with Diamond Offshore Drilling for its Otway Basin program after the rig arrived late.

Beach, along with Joint Venture partner OGOG, had booked the rig for a drilling program in the Otway Basin in offshore Victoria.

However, the Ocean Onyx rig arrived late in Victorian waters and Beach Energy subsequently terminated the contract.

While the termination of the contract will incur some costs, Beach has assured shareholders these are not material and won’t impact its production, underlying earnings before tax, interest, depletion and amortisation (EBITDA) or depreciation, depletion and amortisation (DD&A) guidance for the 2020 financial year.

The company is now in discussion with Diamond Offshore Drilling and looking at a new contract, taking into consideration COVID-19 restrictions.

At this stage, Beach estimates drilling under a new contract would not commence until the 2021 financial year.

Company shares are down 1.44 per cent and trading for $1.37 at 3:21 pm AEST.