22 June 2015
Tullow Oil plc (‘Tullow’ or the ‘Group’) announces that it has settled its Capital Gains Tax (‘CGT’) dispute with the Government of Uganda and the Uganda Revenue Authority (‘URA’) with regard to its farm-downs to CNOOC and Total in 2012.
Following constructive discussions with the Government of Uganda and the URA, Tullow has agreed to pay $250 million in full and final settlement of its CGT liability. This sum comprises $142 million that Tullow paid in 2012 and $108 million to be paid in three equal installments of $36 million. The first of these was paid upon settlement and the remainder will be paid in 2016 and 2017.
Tullow disputed the URA’s assessment of $473 million of CGT payable following the farm-downs and appealed against the assessment before the Uganda Tax Appeals Tribunal (‘TAT’) and commenced an International Arbitration in September 2013. In July 2014, the TAT rejected Tullow’s appeal and assessed Tullow’s CGT liability for the farm-downs at $407 million less $142 million previously paid. In its 2014 accounts, Tullow recorded a contingent liability of $265 million in relation to the dispute. Tullow subsequently appealed the TAT ruling to the Ugandan High Court and continued with its International Arbitration claim. Following this settlement, both these legal proceedings have been withdrawn.
COMMENTING TODAY, AIDAN HEAVEY, CHIEF EXECUTIVE SAID:
“The settlement of this long-running dispute is good news for Tullow and Uganda. In recent months, the Government of Uganda has proposed welcome and necessary changes to its tax regime for oil and gas investments which it is hoped will enable substantive progress to be made towards the sanction of the Lake Albert oil development.”