standard proceedure, page-15

Happy to provide an overview without going back and verifying every issue - some of the numbers may be subject to challenge. By way of background:
NXS contracted the rig for a 260 day contract to drill 5 development wells , complete the 8 wells in total + potntial other work to commence early May 09. As a side issue (but material to the case)NXS was suspended from trading around Mar 09 for a few months from memory because they were in a mess (effectively insolvent / accounts shortly thereafter heavily qualified by the auditors questioning going concern basis other than being reliant on asset sales).
Yes it was Transocean who cancelled the contract.
Now we have to use our imagination:
In all likelyhood TO cancelled the contract because they believed that NXS were not in a position to honour their commercial arrangements / stock suspended, no money (there appears no other reason)etc etc and TO have a requirement under basic contract law to mitigate their losses (ie) they have to seek another party / work to lessen the losses suffered under a following Breach of Contract claim so they contracted the rig to Karoon or Conoco Phillips???. Now I cant remember if they sent the rig to Spore for work before this new contract was performed or after????????.
NXS are effectively saying you had no right to cancel the contract as we would have honoured our contract obligations as they had announced a sale of 50% of Longtom in May and shares were released from suspension, rights issue followed later on.
None of us here have access to the contract and specific remedies and obligations - this to me seems like the 1st issue for the court to decide, its a bit like "is the cart before the horse", did / could TO rightfully forsee that NXS couldnt honour the contract / pay the rental?????.
It seems to me a secondary issue that NXS are relying on is the fitness for use of the rig, their defence makes 4 specific claims of deficiency - from memory corrosion of oil transfer lines (may be significant), fuel line issue , Hawkjaw issues (not an issue really -IMHO clutching at straws) and perhaps of great significance being a claim that the Rig was not certified, flagged, registered or in breach of these certifications. This is significant if it is the case, is there actual substance to such claims or a suspicion on NXS part????. I bring back into question what I raised earlier - did Karoon/ Conoco use the rig immediately after the NXS contract was cancelled or was the rig sent to Spore for repairs first and then brought back into country for Karoon/Conoco - this may be strong circumstancial evidence for either party, I do not remember with certainty the sequence of events but at a push I think the repairs were carried out and then the rig came back in to Australia.
At the time I had a heavy investment in NXS and remember calculating a "back of the envelope" liability of about $35m if NXS were in the wrong. The TO claim will include mobilisation and demobilisation costs to Spore & back, will be loaded with these types of costs.
Will NXS win or will it lose = no idea and none of us know.
What concerns me on the negative is that at the time NXS were in significant trouble - was it enough under the contract to allow TO to walk and back then NXS mgmt were pretty gung ho and didnt seem to put "too finer a point on things", the positive for NXS is that TO have had a number of QOHS disasters of their own so perhaps NXS have some valid issues.
What I do know is that a 100% loss has been factored into the sp, if it is a loss dont know how they will fund it other than getting ahead of the game by selling some of Crux and LT.