More information on the subject from todays Oil and Gas Insider,...

More information on the subject from todays Oil and Gas Insider, for anyone interested.

July 6: Multi-national rig contractor Transocean picks an old scab, starting Federal Court proceedings against Nexus over a rig contract from 2009. The dispute involves the cancellation of a contract for the Transocean Legend floater, and whether Transocean (through its affiliate Sedco Forex) was entitled to terminate the contract.

Some background: In June 2008 the
Transocean Legend was confirmed as coming
to the coast for Nexus for a 260-day program
centred on a 5-well Crux development
campaign in Browse Basin AC-L-9, with drilling
scheduled to start between February-April in
2009. ASX junior Oilex also negotiated slots on
the Legend after the Nexus program.
The rig came into Australia in March 2009, but
was diverted to Woodside?s Brecknock-4 in
Browse Basin WA-32-R when Nexus wasn?t
ready to receive it. Nexus had placed itself into
voluntary suspension on March 11 ?while it
sought to progress negotiations in relation to
asset sales, debt raising alternatives and
significant contractual obligations?.
It?s thought these ?significant contractual
obligations? referred to the contract for the
Transocean Legend. But the main problem for
the company at the time was that the
deteriorating global financial situation meant it
couldn?t sell an interest in its Crux liquids
project as planned.

Nexus placed Crux on hold and embarked on a
strategy of reducing capital expenditures ?to
enable the company to retain flexibility and
maximise the inherent value of the Crux liquids
project, until market conditions improve?.
Negotiations ensued between Transocean and
Nexus, but eventually the rig departed in June
2009 for maintenance in Singapore before being
redeployed in Australia for ConocoPhillips? 3-
well Browse Basin program in WA-315-P and
WA-398-P which started in July 2009.
Since then the rig has stayed on the coast,
picking up work for Eni and now on subassignment
to Hess for Exmouth Sub-basin
WA-390-P drilling.

The last mention of the dispute in Nexus?s
quarterly reports was in the period ending June
30 2009, when the company said ?Sedco Forex
has foreshadowed a damages claim, which
Nexus will be vigorously defending?.
So it?s taken some time to come to light, but
now the world?s largest drilling contractor is
seeking damages saying Nexus wrongfully
?repudiated? the Transocean Legend contract
in May 2009.

However Nexus strenuously denies all
liabilities to Sedco, instead claiming the rig
wasn?t able to perform the contract and
[Transocean] was not therefore entitled to
terminate it, that the contract was terminated
so Transocean could fulfil another contract?,
and there were doubts about the rigs
maintenance and safety.
Nexus continues to say it will be vigorously
defending Sedco's claim.
Shares in Nexus dropped from an opening price
of $0.335 to $0.315 in the hours after the
announcement.
Nexus was trading down $0.01 at $0.31 on
volumes around 2.2mil earlier today.