I assume that Globedrill and their GT3000 is OK. But Interesting...

I assume that Globedrill and their GT3000 is OK. But Interesting times regarding the parent of this technology. I hope this will not be a problem for KUTh's drilling programmes (assuming they were to be the provider):

*****

Coretrack’s Strange problem

James McGrath
Friday, 3 February 2012

CORETRACK will sell off subsidiary Globe Drill’s assets ahead of a legal fight with GT3000 rig licensor Strange Investments after it terminated the intellectual property licence agreement.

Strange alleged modifications made to the rig during its Telfer gold mine contract with Newcrest Mining breached an IP licence agreement but Coretrack won’t go away quietly.

It said it intended to pursue Strange through the courts for loss of earnings and damages after Strange terminated the agreement unlawfully, curtailing Coretrack’s ability to source funding for improvements to the rig.

Strange alleged two key breaches of the agreement, being Coretrack’s fitting of “improvements or accessories” to the rig without Strange’s approval and promoting and use of the rig at Telfer without gaining the consent of Strange.

It is also seeking immediate delivery of the rig.

On the first point, Coretrack said many of the items fitted to the rig were either repairs or maintenance-type items which were necessary to overcome a lack of capacity, power or capability.

For example, it noted, some of the items installed were minor items such as the installation of a safety handrail or a replacement hydraulic fitting.

Coretrack said the IP agreement required Strange, the licensor, to allow the licensee to rectify any remedial breaches within 30 days.

On the second point, Coretrack said it was not aware of any provision within the IP agreement which would obligate it to seek agreement with Strange on the promotion and use of the rig at Telfer.

However, Coretrack said it was in regular telephone and email contact with Warren Strange of Strange Investments regarding the Telfer contract and was even given a copy of the contract with Newcrest.

The loss of IP agreement hampers Coretrack’s efforts to secure funding to upgrade the rig after its failed Telfer contract.

Coretrack chief executive officer Bernie Kelly told EnergyNewsBulletin it would be next to impossible to secure funding.

“It would be impossible to get any kind of funding from the market while we’re in a contentious situation with our licensor,” he said.

Coretrack was forced to withdraw its GT3000 deep hole drilling rig from Telfer after highly unconsolidated ground and massive water inflows led to delays onsite.

Water inflows of up to 250 litres per second contributed to a significant slowing down in the expected rate of penetration onsite.

Teams were forced to stop drilling for two hours after every hour of drilling to remove unexpected massive volumes of water before drilling could restart.

It said on one occasion the ground was so cavernous it sucked up an entire mud system inventory of 18,000L of mud drilling fluid within just minutes.

A subsequent review of the rig’s performance at Telfer found the rig would not be able to meet its technical and functional specifications without undergoing costly and time consuming modifications, upgrades and redesign work.

As a result of being unable to find money to undertake the work, Coretack will start selling off its Globe Drill division.

Globe Drill has just over $A16 million of assets but Coretrack will undergo a review of Globe assets ahead of any sale of equipment.

Despite the sell-off, Kelly said it wouldn’t be the end of Coretrack’s involvement in the drilling business.

“We’re looking at other opportunities and I’m not saying that we wouldn’t consider drilling in the future because we have a lot of experience in drilling but I think working with Warren Strange is not the way forward,” he said.

The wrangling between Coretrack and Strange Investments could have more spice though, as details of a failed dry hire were put forward by Coretrack.

It said Warren Strange, as Strange Investments’ representative, had pursued a contract for the use of the GT3000 rig in Slovakia last month.

While Coretrack said it was disappointed Strange wasn’t pursuing the contract through its business, it nevertheless was agreeable to dry hiring the rig to Strange on “acceptable terms”.

However, it soon found the company Strange intended to take the rig overseas was Strada Energy which was only recently set up, had paid up capital of $2 and its only director and shareholder was Strange’s 22-year-old son.

Subsequently, Coretrack sought a suitable guarantee but Strange would not provide one.

“That took place about a month ago. The board were quite happy to proceed – as was I – but when we saw what company he wanted to operate through, we had to ask for a guarantee,” Kelly said.

“We didn’t want the rig to go overseas with a company with 2 dollars … it’s not a $2 million company, it’s a $2 one where his son’s the secretary and director.”

Kelly also revealed shareholders had questioned why Coretrack would not do the deal but said it could not in good conscience accept the proposition.

While clarification on the non-dry hire was released to the market along with revelations about the IP action, Kelly would not be coaxed into drawing any connections between the events.

“I really can’t speak to his motivation,” Kelly said when asked whether the failed dry hire served as the catalyst for the potential legal stoush.

Coretrack said it would focus on other opportunities and its core level recorder system technology, which was ready for commercial work having successfully completed an offshore trial with Woodside Energy recently.

Warren Strange was unavailable for comment yesterday but a lawyer for Strange confirmed to ENB Strange Investments had received a letter outlining Coretrack’s legal intentions.

The lawyer said Strange was not interested in pursuing a public war of words with Coretrack but issued the following statement: “Strange Investments is confident that it has validly terminated the IP licence agreement with Coretrack and it has the right to request immediate delivery of the GT3000 drilling rig”.

News of the impending clash and Globe sell-off sent Coretrack shares tumbling after it lifted its official suspension from trading on the Australian Securities Exchange at 3.08pm to close at 2.1c, a 36.36% drop on the trade of over 1.2 million shares.