Tuesday 12 December 2017

Tullow Oil wins $313m tax case over assets in Uganda

Company brings in French and Chinese partners

Tullow Oil: headed up by Aidan Heavey
Tullow Oil: headed up by Aidan Heavey

Sarah Young

TULLOW Oil said a London court had ruled in its favour in a case the oil company brought against Heritage Oil over tax payable on the sale of oil fields in Uganda.

"Mr Justice Burton found in favour of Tullow's indemnity claim for $313m (€234.8m) in its entirety and also dismissed Heritage's counterclaim," Tullow said in a statement.

The legal battle dates back to 2010 when the Ugandan government demanded more than $400m in capital gains tax after Heritage Oil sold assets in the east African country to Tullow in a $1.45bn deal.

Heritage said it strongly disagreed with the decision and would evaluate its legal options with a view to launching an appeal. It has 21 days to do so.

Irish-led Tullow, headed by Aidan Heavey, said it might be entitled to further payment from Heritage in costs and from the interest Heritage could owe Tullow on the $313m. A further hearing would be scheduled to address these matters.

Heritage said the ruling would not impact its current cash position as the sum had already been reserved, partly in an escrow account and partly by a deposit with Uganda.

Tullow has brought in new partners, France's Total and China's CNOOC, to Uganda and the three companies are planning a multi-billion dollar oil development.

When the original deal between Heritage and Tullow was concluded, Tullow paid the Ugandan revenue authority (URA) $121.5m – a third of the original $405m tax demand – and put the remaining $283.5m into an escrow account.

In 2011, Tullow complied with another URA demand for a further $313.5m payment, which included the balance of the original tax demand, plus an extra $30m.

In afternoon trading, shares in Heritage were down 2.6pc at 138.5 pence, underperforming the European oil and gas company index which was 0.5pc higher. Tullow was up 1pc at 1,044 pence. (Reuters)

Irish Independent

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