Monday 24 November 2014

Tullow Oil holds on to $346m court award

Published 24/07/2014 | 02:30

Tullow Oil chief executive Aidan Heavey
Tullow Oil chief executive Aidan Heavey

A Ugandan subsidiary of Tullow Oil has successfully defended a $346m (€257m) award it secured from Heritage Oil last year in London's High Court.

The Court of Appeal yesterday rejected Heritage's efforts to have the award reversed.

The ruling related to a deal signed in 2010, which saw Tullow, whose chief executive is Aidan Heavey, agree to pay £1.45bn (€1.83bn) to buy Heritage's assets at the Lake Albert basin in Uganda.

Heritage claimed that it wasn't liable for a $434m (€322m) capital gains tax bill that was due as a result of the sale, and handed over just $121.5m to the Ugandan government.

On Heritage's behalf, Tullow and its partners later paid the remaining capital gains tax that the Ugandan Revenue Authority had been seeking.

But Tullow later sought to recoup that payment from Heritage in London's High Court.

Liable

Last year, it was successful in holding Heritage liable for the additional capital gains tax that had been due in Uganda.

Heritage was then granted permission by the Court of Appeal to appeal certain aspects of the High Court judgment.

The Court of Appeal yesterday ruled in favour of Tullow on all but one point.

That one point relates to indemnity claims and requires Tullow to repay $2.5m as well as come interest to Heritage.

The decision comes just days after Tullow was hit with a $407m (€302m) tax demand by the Ugandan tax authority, which the company is challenging.

That bill relates to a sale by Tullow of a stake in the same assets it bought from Heritage. It sold the stake to China's CNOOC and France's Total.

Tullow claimed that it had been granted an exemption from capital gains tax on one of the Lake Albert exploration blocks by a previous Ugandan energy minister.

But the country's tax appeals tribunal said that minister didn't have authority to do such a deal.

Mr Heavey said he was "very concerned" by the ruling and said it would be "robustly" challenged.

Indo Business

Promoted articles

Read More

Promoted articles

Editors Choice

Also in Business