Rift is seeking about $US1.65 million from Austral, relating to the drilling of the Puk Puk-1 exploration well at Douglas, which was spudded on May 10 using the Coral Sea rig.

Rift is also seeking a further cash call of $US1.2 million for the well.

Austral chief executive Thompson Jewell said the company would defend itself against Rift's claims and continued to challenge Rift's entitlement to issue cash calls and progress the drilling of Puk Puk-1.

The company is disputing Rift's requirement that Puk Puk-1 be drilled this year, rather than next.

Austral added it considered that Rift had failed to follow due process in setting minimum work commitments for 2008 and 2009, and failed to provide such information, as previously presented to the PNG Government.

The company also said Rift had failed to progress commercial planning requirements called for in the memorandum of understanding between the joint venture partners and Alcan South Pacific, regarding the possibility of exporting Douglas gas to the Gove Refinery in the Northern Territory.

Meanwhile, Jewell said Austral's underlying financial performance was strong and the company had made significant gains in managing short-term challenges.

He added that $US4.4 million of the loss related to non-cash components associated primarily with unrealised derivative losses and depletion.

Austral had reduced its liability from $US49 million to $US32 million and its long-term debt from $US18 million to $US14.5 million during the March quarter, with a further reduction of $US3.5 million expected this quarter.

Jewell said Austral had monetised its non-core projects in PNG at an opportune point and would continue to "high grade the portfolio of assets with disciplined capital spending, divestments and additions as warranted".