New South Wales coach Michael Cheika believes retaining Wallabies star Israel Folau is just a matter of refining a few details and is also preparing to duel with Melbourne Rebels for Kurtley Beale's services.

Cheika has also ruled the Waratahs out of making a play for Wallabies utility back James O'Connor, who has been told he's unwanted at Super Rugby rivals the Rebels.

Cheika remained confident of retaining Folau, who made his Test debut in the British & Irish Lions series and was impressive despite coming from the field early during the third Test decider because of a hamstring strain.

"He's enjoying himself in rugby and that series would definitely have given him great experience," Cheika said. "I don't think it will be a clincher in any way, shape or form. I think his decision - in his head has already done it - even before entering into that Test series. It's just a matter of us refining the details and the duration and what's going to happen and hopefully they will get finalised in the near future."

Cheika believes Melbourne will now step up their bid to retain Beale, who has battled alcohol-related issues this year and twice been stood down by the Rebels.

"We're still looking at him," Cheika said. "With O'Connor leaving Melbourne, they will be more interested in Beale trying to stay. While they've had their Test commitments, I've stayed away from them because I don't want to be busting them with that type of stuff when they've got huge matches on their hands. Now that's over, we'll concentrate a bit more on those things."

Cheika also cited a number of factors why he wasn't interested in acquiring O'Connor.

"I think we're looking to play a different style to the way James plays," Cheika said. "And also I've got more than enough players in that part of the field and I would never be able to fit him into the salary cap either."

Cheika said his Wallabies had returned to the squad disappointed but expected them to bounce back against Queensland at ANZ Stadium on Saturday.

"It's like you've got to get over a death in the family and move on," Cheika said. "Mourn it and then get on and you become better from it."

Wycliff Palu (knee) is the Waratahs' main injury worry apart from Folau, who has already been ruled out.