Subsidiary Enegi Oil Inc has been working with PVF Energy Services on the licence - Production Lease 2002-01(A).
PVF has put in a claim of C$1.12mln for work carried out.
"The terms of the production sharing agreement (PSA) clearly state PVF will carry out the work programme 'at its sole cost, risk and perils' with costs reimbursable out of production from a well and not by Enegi’", Nu-Oil said in a statement.
Graham Scotton, Nu-Oil’s executive chairman, added: "The company has been attempting to work with PVF in good faith to find an appropriate way forward for Garden Hill, despite the operational issues encountered.
"We are surprised and disappointed that PVF has chosen to take this action, in contravention to the terms for dispute resolution and cost recovery in the agreement signed by the parties.
“The situation will take time to resolve, however, I do not expect it to affect our ongoing efforts to secure new assets or have any impact on the company's funding requirements.”